ACCA Advanced Taxation (ATX) Practice Exam

Which scenario does NOT provide an exception to the two-year rule for Business Property Relief (BPR)?

1. Inherited property from a spouse

2. Replacement of business property

3. Successive transfers of property

4. Gifts made during a person's lifetime

The correct answer is: Gifts made during a person's lifetime

The two-year rule for Business Property Relief (BPR) generally requires that a business property must be held for at least two years immediately prior to the transfer of that property to qualify for relief. The scenario involving gifts made during a person's lifetime is the correct answer because it does not qualify as an exception to this rule. When gifts of business property are made during a person's lifetime, they do not meet the criteria for immediate relief under BPR if the donor did not hold that property for the full two years. This means that even if the recipient loves the business property received through gifting, there is no exemption from the two-year holding requirement unless specific exceptions apply, such as those outlined in other scenarios. In contrast, inheriting property from a spouse is exempt from the two-year rule, as property passed to a spouse is treated as if it was held for the necessary period. Likewise, replacing business property involves provisions that could allow the new property to qualify based on the holding period of the original asset. Finally, successive transfers of property can also fall under particular exceptions, allowing for continued BPR eligibility in certain conditions.