ACCA Advanced Taxation (ATX) Practice Exam

Which of the following scenarios qualify for 50% relief under Business Property Relief?

1. Quoted shares held by a family member

2. Unquoted shares with no control

3. Quoted shares from a controlling holding

4. Cash assets of the company

The correct answer is: Quoted shares from a controlling holding

Business Property Relief (BPR) is designed to reduce the value of certain business assets for inheritance tax purposes, particularly if they are used in a business context. To qualify for 50% relief, the asset must be considered somewhat lesser in its contribution to the business but still part of the business. The scenario involving quoted shares from a controlling holding is appropriate for this relief because they are clearly linked to the operation of a business. While quoted shares generally do not qualify for BPR as they are publicly traded and typically seen as more liquid assets, shares that represent a controlling holding in a company may qualify for partial relief, depending on additional factors related to their use in trade and the extent of the control exercised. Balancing risk and control, having a significant influence over the operations of a company through a controlling interest enables a portion of the value of those shares to be recognized as business assets, justifying the 50% relief under BPR. In contrast, quoted shares held by a family member do not qualify for relief since the shares are not necessarily tied to business operations; similarly, unquoted shares with no control do not provide the requisite influence over the business for relief consideration. Cash assets of the company also do not qualify, as they are