Replacement business property on AIM shares

[probate_slave]

IHT412 and its notes seem very quiet on the subject of replacement property. Here's a scenario from my mother's estate:

18 months before her death, shares in qualifying AIM company A (already held for 10 years) are sold for £30k.
Shares in AIM company B are immediately bought for £20k.
6 months later, ie one year before death, shares in AIM company C are bought for £20k.

The purchase of C is funded half from the surplus capital and half from accumulated dividends within the portfolio.

The probate value of C falls to £15k. Since half the holding is relievable property, £7.5K qualifies for 100% business relief and the remaining £7.5k is subject to IHT.

Is this correct so far?

But what if transaction costs are taken into account? For example:

A net proceeds £27k after costs of sale, exaggerating somewhat
B net cost £22k
surplus capital only £5k
C net cost £22k
Now only the proportion 5/22 of C is relievable.

I saw that IHT35 asks for gross proceeds on loss relief, which makes sense and happens to be in HMRC's interest. Will they allow gross values here in the estate's interest?

[AGoodman]

Yes, I think that's reasonable. There's nothing about it in the law. Given the sums involved, HMRC are very unlikely to take an interest (unless of course you're knocking two zero's off all your numbers as illustrations!).

[probate_slave]

Thank you again, AG!

Although those examples are close to reality, the total value of my mother's AIM shares which fail the two-year ownership rule but (hopefully) qualify as replacement property is in six figures. And I only learned about the relief from browsing this forum. So, thank you also to the people behind TaxationWeb.