I have not been able to find the answer to this and I wondered if forum members could please assist?
Where a pre-2006 life interest trust converts to a relevant property discretionary trust on the death of the life tenant, does the 7 year clock for APR start again, or can the trustees also rely on the period of APR prior to the date of death?
HMRC treat the life tenant in this case as the beneficial owner of the land up to the date of death, and thereafter the trustees have ownership for IHT purposes. So after the death of the life tenant it is not possible to bring into account the use of the land during his or her lifetime and the trustees must satisfy the conditions for APR themselves. This involves a wait of 7 years before relief is due if they are not farming the land themselves.
This follows from HMRC’s interpretation of ‘owner’ as referred to in s117 IHTA 1894. It is arguable that the section is not referring to beneficial owner but no one has yet challenged this in an appeal.