I3.511 Cumulation, tax rates and taper relief
On the death of a person, any potentially exempt transfers (PETs) made within seven years before his death become chargeable transfers (at the rates described below)1 — these are commonly called 'failed PETs'.
The tax on PETs becomes payable six months after the end of the month in which the death of the transferor occurred2, and is primarily payable by the transferee3 (see I10.111). As it becomes a chargeable transfer it also enters the transferor's cumulation of chargeable transfers for the purposes of charging IHT on subsequent transfers, notably his estate on death4.
In the computation of this IHT charge on a PET which becomes chargeable, it is aggregated with chargeable transfers made in the seven years preceding the date of it5. Thus such a transfer may be aggregated with chargeable transfers made within seven years before it but more than seven years before the transferor's death (and with which the estate on death is not itself aggregated), such as immediately chargeable transfers (see I3.319). Other PETs will only be aggregable with a lifetime transfer if they were made within the seven-year period before the death of the transferor, because it is only if they fall within