No relief in sight

KEY POINTS

• Approach of inheritance tax legislation to business causes confusion.
• Services provided by trustees to tenants of the trust’s properties.
• A qualitative or quantitative test to analyse business.
• HMRC guidance is inadequate.

So far it has been a busy year for consideration of business property relief (BPR) and the specific restriction in IHTA 1984 s 105(3) concerning investment businesses. The legislation providing exemption from inheritance tax for business property approaches entitlement in an entirely different way from that used almost everywhere else throughout the Taxes Act.

Typically our tax legislation restricts such a relief to “trades” but in the inheritance tax legislation there is no such distinction. Instead the term “business” is used and then a condition applied to stop a business qualifying where it is one of “making or...