business property relief on cash in bank

business property relief on cash in bank

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I act for a haulage business with two partners one of whom dies on 30th March 2006. The inspector is refusing Business Property Relief on the cash balance in the bank at the date of death of the 50% partner. The £30,000 balance only arose within 12 months of the death following the sale of some business land and buildings. The cash was intended for the erection of smaller alternative garage for the wagon on an area of remaining land. Is there any alternative relief or can we argue the point?
Any advice would be most appreciated
sean stephens

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By User deleted
20th Oct 2006 10:27

Any track record?
I must confess to being a bit confused over a start figure of 30k and a second one of 165k but, if the latter is the one at date of death ,can now more readily appreciate why CTO considered the matter worth a second look. Hopefully, CTO will accept that the proportion of the deposit account spent on a replacement garage should not be classed as 'excepted' for BPR, but the remainder? Has the firm a track record of real prudency in the sense that it has always maintained material cash resources to pay for new lorries , settle debtors.etc. ? Then you might be able to say: so what's new? Otherwise, I fear there is a problem and I cannot think of an alternative relief.

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By User deleted
10th Oct 2006 16:23

Evidential facts put?
I take it this is an official of Capital Taxes Office who is presumably endeavouring to earn brownie points. There are No doubt some businesses which have built up large (by comparison with other Balance Sheet assets) cash deposits which have been sitting for a considerable time simply earning interest and for which there are no plans other than to keep the status quo. In a situation like this, it would be hard to defend the contention that the deposits are "excepted assets" which do not attract BPR. There seems to be a contradiction here in that the query first refers to cash at date of death and then mentions a balance which was created post-death but within 12 months from that date. I shall assume the former as, otherwise what is there to argue about? One has to show that such cash was earmarked for a specific trade purpose (erection of a garage is fine) and that it would be spent within a finite time-such as the subsequent 12 months. Has this been put to CTO and is there any supporting evidence : application to the local Council for change of use, quotations requested and received from local builders,etc. ? Don't give up and fight on. If such evidence has already been seen by CTO and dismissed, please let's hear their reasons. Could we also know just what percentage of partnership assets in March the cash represented.

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By topjockey10
16th Oct 2006 11:59

Clarification
Thanks for the encouragment. To clarify, the partner died in March 2006 and £165K was in the business current account at that time. The money arose from the sale of the former garage and yard in December 2004. Sufficient land was retained to build a smaller facility. Work was ongoing in March, building a new garage/ resurfacing etc. We can establish how much of the cash was specifically earmarked for the completion of this project and any other capital projects. Can we ringfence any of the funds which would be needed to fund the Debtors and working capital in general? Any other ideas?
Thanks again

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