188ÌåÓý

The replacement property will qualify for business relief if

• it replaced other business property
• the original and replacement property were each owned for periods totalling two out of the five years prior to the date of the transfer
• each item of property was relevant business property (apart from the ownership test) at the time of replacement and the date of transfer

We take ‘replacement� to mean there has to be some tangible connection or link between the pre-existing property and the later property.

For example, if an individual sells a qualifying business interest in A and buys another business interest in B, he or she would be said to have replaced A with B. If however, s/he spent the proceeds on other things, and later borrows money to buy the interest in B, we would not regard that as a replacement. Neither would we regard S.107(1) as applying if the individual gave away the interest in A for no consideration, and later acquired the interest in B from other funds.