Barclays Bank Trust Co Ltd v CIR

Sp C [1998] SSCD 125 (Sp C 158)

The taxpayer owned a 50% shareholding in a family company, which held cash of about £450,000 at the date of her death.  The Executors of the estate claimed business property relief (BPR) in respect of the shareholding under IHTA 1984, s104.

The Inland Revenue accepted in principle that the shares qualified for business property relief but issued a determination on the basis that the company only required cash of some £150,000 for the purposes of its business, and that the balance of £300,000 was an 'excepted asset', within IHTA 1984, s112(2) and, therefore, not eligible for BPR.  The executors appealed, contending that the company had held the cash 'as a contingency measure' in case 'an appropriate business opportunity should arise', so that the cash was 'required … for future use', within IHTA 1984, s122(2)(b).

It was held by the Special Commissioners that, for the purposes of s 112, 'required' did not include the possibility that the money might be required should an opportunity arise to make use of the money at some point in the future; instead, it applies that the money is required for an ascertainable business purpose.