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ACCA Strategic Professional · Advanced Taxation (UK) · Inheritance tax: the liabilities arising on chargeable lifetime transfers and on death

Priya owned all the shares in Rentco Ltd, a company whose main activity is letting residential properties to tenants. She gave the shares to her brother during her lifetime, having held them for 10 years. Which statement is correct about BPR?

BPR is denied. A company whose business is wholly or mainly making or holding investments, such as letting residential property, is excluded from business property relief. The long ownership period, unquoted status and control do not rescue the claim.

  1. ABPR is available at 100% because the shares are unquoted and have been held for over 2 years
  2. BBPR is available at 50% because the company is controlled by Priya
  3. CBPR is denied because the company's business consists wholly or mainly of making or holding investmentsCorrect
  4. DBPR is available only to the extent that rents are reinvested in the company

Explanation

A business that consists wholly or mainly of making or holding investments, including letting property, does not qualify for BPR, regardless of ownership period or control. Shares in such a company therefore get no relief. The ownership and control tests do not override this exclusion.

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