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HMRC internal manual

Inheritance Tax Manual

FACET procedures: purchase of shares

The relief is restricted if the person who is claiming the relief purchases ‘qualifying investments’ (IHTM34131) in the period between the date of death and two months after the date of the last sale. Details of any sales should be provided in part 2 of the form IHT 35.

If the question in part 2 of the IHT 35 is answered ‘Yes’ you should make the following checks

Check Action
   
a) Has 2 months elapsed since the date of the last sale shown in column B? If not, return the form IHT 35 and file if it attached to the caseworker stating ‘last sale within 2 months of submission, return to check whether any additional shares purchases by parties and amend the IHT 35 accordingly, return to FACET when two months have elapsed.’
b) Check that purchase prices used in part 2 are within the Extel Business Done range for the date they were purchased. If not, amend the purchase price shown on the IHT 35.
c) Are any of the purchases included in part 2, actually payments in respect of ‘call’ (IHTM34101) or the taking up of a rights issue (IHTM34104)? If so the purchases should be deleted from part 2.
d) Check the calculation of the allowable loss in part 2 using revised figures where appropriate. Either
  • tick figures on form IHT 35 to show that loss has been agreed, or
  • show revised figures for allowable loss in green on the IHT 35.Form IHT 35 should be returned to the caseworker to continue.

You can get more detailed information about the restriction for purchases at (IHTM34211).

Special rules (IHTM34193) apply if the ‘appropriate person’ (IHTM34161)

  • purchases or acquires the same type of shares as those held in the death, and
  • then sells only a part of the combined holding.