IHTM25333 - Successive transfers:
Limitation of relief
When the successive transfer provisions (
IHTM25331) apply there are two limits
on business relief contained in IHTA84/S109 (2) and IHTA84/S109
(3).
- IHTA84/S109 (2) applies when the property within IHTA84/S109
(1)(c) is replacement property. When this is the case, IHTA84/S109
(2) restricts business relief by providing that the relief shall
not exceed what it would have been had the replacement or any one
or more of the replacements not been made. For this purpose a
replacement resulting from the formation, alteration or dissolution
of a partnership, or from the acquisition of a business by a
company controlled by the former owner of the business, is to be
disregarded.
This is an anti-avoidance provision and its purpose is
to prevent a person who has qualified for relief from purchasing a
much more expensive property shortly before death or making a
transfer.
Your approach to IHTA84/S109 (2) should be similar to that
to replacement property (
IHTM25313) generally.
- Under IHTA84/S109 (3), if the earlier transfer was a
part-purchase, so that only a proportion of the property was
reflected in the value transferred by that transfer, the relief is
restricted to the same proportion.
