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HMRC internal manual

Inheritance Tax Manual

Successions: Example of occupation by a company

Under IHTA84/S119 (1) occupation (IHTM24070) by a company controlled by the deceased/transferor is treated as occupation by the transferor for the purposes of s IHTA84/S117 and IHTA84/S118. Despite the omission of any reference to IHTA84/S120 in IHTA84/S119 (1), you should apply IHTA84/S119 (1) as if it deems the provisions of IHTA84/S120 (1)(a) to be satisfied.


A inherited farmland on the death of T in1998. The land was then farmed by XYZ Ltd, a private company.

In2000, A purchased a control shareholding in XYZ Ltd.

In2001, A settled the farmland on discretionary trusts. XYZ Ltd still farmed the land.

The 2001 transfer into settlement was an immediately chargeable transfer. The effect of IHTA84/S117, IHTA84/S119 (1) and IHTA84/S120 (1)(a) is

  • A is deemed by IHTA84/S120 (1)(a) to have owned the land since T’s death, but
  • as T’s death was less than seven years before the transfer by A, A cannot satisfy the seven year ownership test in IHTA84/S117 (b),
  • nor does IHTA84/S120 (1)(a) by itself enable A to satisfy the two year occupation test in S117(a). Under S120(1)(a) a transferor who subsequently occupies the property is deemed to have occupied it from the date of the earlier death. But A did not occupy the farmland. The company did.
  • however, by virtue of IHTA84/S119 (1), A is treated as occupier from the date of purchase of the control shareholding in 1990
  • because A is subsequently treated as occupying the property at some point between the transfers, that deemed occupation of the farmland is backdated to T’s death by IHTA84/S120 (1)(a)
  • the land was occupied by XYZ Ltd for agricultural purposes throughout the period between T’s death and A’s transfer.

Accordingly the two year occupation test in IHTA84/S117 (a) is treated as satisfied even though A’s deemed occupation, by virtue of IHTA84/S119 (1), began less than two years before the 2001 chargeable transfer.