Association of International Life Offices - PETs and the strange case of Mrs Bower

Mrs Bower established a 'discounted gift trust' (DGT) in 2002 when she was nearly 91 years of age. This was a potentially exempt transfer (PET) of inheritance tax. The premium for the bond was £73,000. The payment stream selected was equivalent to an annual 5% of the premium paid on a monthly basis (£304.16). Mrs Bower died approximately five months after taking out the policy. Her PET therefore 'failed'. So what discount was to be applied in calculating that failed PET? HM Revenue & Customs (HMRC) suggested a figure of £250; Mrs Bower's executors suggested a figure of £7,800. No agre...