IHTM14703 - Lifetime transfers: specific lifetime reliefs: potentially exempt transfers (PETs): assets representing the asset transferred

The property acquired by the deceased from the transferee must be the actual property transferred or must directly or indirectly represent that asset.

Gifts of cash may present difficulties, but, generally, you can treat cash subsequently acquired from the transferee as representing the gifted asset, unless the facts are such that this could not have been the case. For example, if the cash gift had been used to buy a house still owned by the transferee when he gave cash to the transferor.