Inheritance Tax Act 1984 section 109A

Additional requirement in case of minority shareholdings

Section 109A imposes an additional condition that must be met before a claim for loss on sale relief can succeed where the shares being sold represent a minority holding in the company.

• Where shares sold after death represent a minority holding, an additional test applies before loss on sale relief can be claimed.
• The claimant must show that the shares could not have been sold as part of a larger holding that would have achieved a higher per-share value.
• This prevents taxpayers from artificially splitting a larger holding into minority parcels to generate a loss for relief purposes.
• The provision was introduced by Finance Act 1996 to tighten the rules around claims involving shareholdings that do not carry control of the company.

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