To qualify for agricultural relief (or business relief) the
donee is generally required to hold the gifted property until the
time of the GWR charge, (
IHTM24200) FA86/SCH20/para8 (3).
However, where the original property comprised in the gift
has been disposed of by the donee and further property acquired in
substitution, the later acquired property will be treated as the
property comprised in the gift under the tracing provisions, (
IHTM14371) FA86/SCH20/para2
But where the original property given by the donor consisted
of a control holding of shares and securities in a company with
agricultural assets (a holding within IHTA84/S122 (1)) any property
acquired in substitution will not qualify for agricultural relief
(or business relief) because of the ownership requirement at
FA86/SCH20/para8 (3)
Therefore, the tracing provisions (
IHTM14371) may apply in respect of
agricultural property (
IHTM24030) or relevant business
property acquired in substitution of the original agricultural
property comprised in the gift unless that property is
‘shares or securities’. Advice should be taken on any
case where it is claimed that agricultural or business relief
should apply in respect of substituted property.
