Disabled Trust or Interest in Possession??

[Cornwall]

Facts Mother set up Trust 2/5/1991 settling her home 'in favour of her daughter for provision of reasonable care and maintenance within the meaning of Sect 11 of the IHT Tax Act 1984' (daughter was mentally and physically handicapped [in receipt of disabled benefits]). Mother died 8/2/1999.
On the death of the daughter 30/12/2005 the property was sold and monies divided between the grandchildren as per the Mothers Will made in 1994.
I hold that this is a 'disabled/discretionery trust' but the tax office have advised Solicitors that the daughter had an 'Interest in Possession' and also that monies received from her mothers residual estate was part of the Trust? (There is no mention of this in the Trust documents)
Note: No income arose from the Trust the daughter only lived in the property until her death.
Do you agree it is IIP? and if so is there any way of minimising the IHT liability i.e. is there an opening value to set off against value at date of daughters death?
Thanks in anticipation of any help received
Cornwall

[Lee Young]

Impossible to be categorical about any of this without seeing copy trust documentation and a copy of the mother's Will.