Inheritance Tax : Business Property Relief

Shares in companies that are traded on AIM are deemed to be unlisted for the purposes of certain areas of UK taxation and may benefit from certain reliefs including Business Property Relief ( BPR ). Accordingly, individuals who hold Ordinary Shares and who meet the two year ownership condition may be eligible for UK inheritance tax business property relief, although based on the current nature of the Group and its assets full relief at 100% may not be available and indeed may not be available at all in the future should the Group's activities change. Shareholders and prospective investors should therefore consult their own professional advisers to determine to what extent any potential UK inheritance tax benefit referred to above is available to them at the relevant time.

To assist shareholders the company's general understanding of the position with respect to Business Property Relief is shown below although no liability is accepted for any factual errors or omissions in this information which is given as a courtesy to interested parties. Anyone wishing to establish the definitive position on FIH's qualification for BPR should consult their professional adviser.

In order for shares to qualify for Business Property Relief from inheritance tax, the shares must be in a trading company ie. the company must not be wholly or mainly dealing in land or buildings or making / holding investments. The group is looked at by the tax authorities in the round – i.e. all aspects of the business (use of assets, resource, asset value) are taken into consideration to determine this. ‘Wholly' or ‘mainly' has its literal meaning – i.e > 50%. It is quite an unusual test as it is not all or nothing. If on this first test, the group meets the qualification as a trading group against the definitions of trading provided by HMRC, (i.e not wholly or mainly dealing in land or buildings or making/holding investments) then the situation of each company within the group is reviewed at the relevant time to see whether they have any activities or assets not meeting the trading definition which would then result in a restriction of the relief available. Any subsidiaries which do not meet the trading definition (e.g. involved mainly involved in property rental or joint ventures ) are not regarded as qualifying for BPR purposes and their exclusion would restrict the value of the group (and hence the value of FIH shares) that qualifies for BPR.

There are currently certain group activities which might be construed as non- trading including but not limited to the Group's buying and on occasion selling of land and buildings in the Falklands, and its rental of storage space for objects of art at Momart. Whether FIH shares qualify for BPR would depend on the HMRC's interpretation of these activities, both at the date of any gift (and for a reasonable time prior to that) and at the date of inheritance, which would be at some point in the future. Tax rules can change and the precise tax implications for you will depend on your particular circumstances.

The Company is therefore not in a position to give any definitive advice on this matter and we therefore strongly recommend that you consult your own tax advisor to determine whether a claim for BPR relief can reasonably be made.

If you are in any doubt as to your tax position, you should consult your own independent professional adviser.

Operating Companies