Revenue Note for Guidance

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Revenue Note for Guidance

101 Withdrawal of relief

Summary

This section provides for a clawback of business relief in the event that the business concerned is sold or leased or ceases to be a qualifying business within 6 years of the date of the gift or inheritance. In addition, the relief granted will be reduced where the property in respect of which relief was granted is replaced by other property whose value is less than the value of the original property. The reduction will be in the same proportion that the market value of the replacement property bears to the market value of the original property.

Details

(1) “relevant period” means the period of 6 years after the date of the gift or inheritance.

(2) The relief granted in respect of relevant business property will be clawed back if and to the extent that—

  • the relevant business property, or any property which replaces it, either directly or indirectly, ceases to be relevant business property within the relevant period otherwise than by reason of bankruptcy or as a result of a bona fide winding-up on grounds of insolvency, or
  • the relevant business property, or any property which replaces it, either directly or indirectly, is sold, redeemed or compulsorily acquired within the relevant period and is not replaced within a year of the sale, redemption or compulsory acquisition by other relevant business property.

The clawback provisions will not apply to any land, building, machinery or plant within the meaning of section 93(1)(e) for so long as they continue to be used for the purposes of the business concerned nor will it apply where the relevant event happens after the death of the donee or successor.

(3) Where the original property has been replaced, directly or indirectly, by other property and the market value of the original property is greater than the market value of the property which replaced it, the relief is reduced in the same proportion that the market value of the replacement property bears to the market value of the original property.

Relevant Date: Finance Act 2015