Solicitors Qualifying Examination (SQE) Practice Exa\

Business relief can be applied to Inheritance Tax in situations where the deceased owned shares in a qualifying business and had voting control of that company at the time of their death. This requirement for voting control is crucial because it ensures that the owner has significant influence over the operations and decisions of the business. Business relief aims to mitigate the burden of IHT on the transfer of business assets, thereby encouraging business continuity and investment. To qualify for business relief, the shares must be in a business that is actively trading and not just held as an investment. The relief applies to businesses using their assets to generate profits and meet certain criteria set by HMRC. The aspect of having 'voting control' means that the person could direct the business and its activities, solidifying their position as a crucial part of the company, thus justifying the relief. In contrast, options that involve the selling of shares within a specific timeframe, hold shares for less than a year, or pertain to non-trading entities do not align with the requirements for Business relief. Selling shares soon after death does not confer the necessary business ownership and control. Non-trading entities are disqualified from benefiting from this relief, as they do not meet the criteria of engaging in active business operations.