The meaning of the term “unquoted” for instalment
purposes has not been constant and has diverged from the general
definition provided by IHTA84/S272 -as introduced by the FA 1987
with effect from 17 March 1987. F(No.2)A 1992, with effect from 10
March 1992, provided a separate definition for both Business Relief
(
IHTM25131) and instalment purposes
under which shares dealt in on the USM (
IHTM18339) were treated as unquoted.
With effect from 1 April 1996 the word “quoted on a
recognised stock exchange” in IHTA84/S227 (1AA) and in
IHTA84/S272 was replaced by the word “listed”.
Furthermore the distinction between the USM and a recognised stock
exchange was rendered largely irrelevant with the demise of the
former at the end of 1995. The term “recognised stock
exchange” was defined by TA88/S841, but with effect from 28
November 2001 HMRC adopted a revised interpretation. Advice on
whether particular stock exchanges can be accepted as within the
interpretation can be obtained from SAV (Foreign). Shares dealt in
on the USM and on its replacement, the Alternative Investment
Market (
IHTM18336), are unquoted, whilst shares
traded on NASDAQ (
IHTM18341) are quoted as from 10 March
1992. Following the revised interpretation shares admitted to
trading on EU “junior” markets and on NASDAQ Europe (
IHTM18341) are regarded as unquoted.
With one exception the point will rarely arise since, with
effect from 1 April 1996, all unquoted shares will qualify for 100%
Business Relief unless they fall within IHTA84/S105 (3). If they
fall within that section, or are as described in IHTA84/S105 (4)
(see IHTA84/S234 (2) and IHTA84/S234 (3)(a)), they will only
qualify for interest free (
IHTM30363) instalments to the extent
that the value is treated as reduced by Agricultural Relief (
IHTM24000).
The exception is where the unquoted shares would have
qualified for 100% Business Relief but for the provisions of
IHTA84/S106, i.e. they were not owned by the transferor throughout
the two years immediately preceding the date of transfer. In this
case the shares will qualify for interest free instalments.
