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HMRC internal manual

Inheritance Tax Manual

Successive transfers: Introduction

The ownership test (IHTM25301) is not satisfied if the business property was not owned by the transferor (IHTM25302) throughout the two years immediately preceding the transfer.
However, you can still treat the test as satisfied if there was an earlier transfer of value and certain conditions are met, IHTA84/S109 (1).
These conditions are:

(1) the property was eligible for business relief at the date of the earlier transfer

(2) it became part of the property transferred by a subsequent transfer

(3) it would have been relevant business property (apart from the two year ownership condition) at the date of the subsequent transfer

(4) either the earlier or the subsequent transfer (or both) was/were one made on death.

The succession provisions (IHTM25321) do not apply to IHTA84/S109.