Well that question's as clear as mud! Do you mean IHT (inheritance tax) or do you mean CGT (Capital Gains Tax)? If the former, why does selling your land create a charge to IHT? If the latter, it's immaterial what a lessee has done; CGT would be levied on the profit being the net proceeds of disposal less the original cost.

You're still not giving us a lot to go on, malcolm!

If the land was part of an estate whose total assets exceeded £325,000 (or £650,000 for combined married couple) and is therefore liable to IHT, then it has to be valued at the date of death in whatever condition it was then in (let/unlet; developed/undeveloped etc). Such a valuation will have to be agreed with the taxman and in matters of land he will look to the District Valuer to agree a value. IHT falls on the estate and not on the recipient. If the recipient of the land subsequently sells it at a higher price - whether as a result of development, letting or just inflation - then CGT will be payable on any difference between the Probate Value (on which IHT was paid) and the subsequent net proceeds of sale (subject, obviously, to the annual CGT allowance and any other offsetting losses).

I think it's a big issue in Scotland. Farm Tenants are often unable to develop their farm business through reluctance of some landlords to grant permission for development which might then place a burden on their family's future ability to pay the whole estate IHT liabilities. Good tax planning essential.