Readers’ forum: At your discretion

My client died in September 2018. She was UK resident and was the settlor and beneficiary of a discretionary trust. A vulnerable person’s election was in place.

In March 2019 the trustees cashed in an offshore bond because funds were required to pay an inheritance tax liability. A six figure chargeable event gain arose on encashment.

My questions to readers are as follows:

• Who is liable to pay the tax?
• Should the gain be reported in the trust tax return the personal return to date of death or the administration return from date of death to 5 April 2019?

I am aware that the position is rather more complicated when an encashment applies after death but before the end of the tax year. Unfortunately I have no practical experience...