Thanks for your responses
Then the first position to be rectified is for this income to be declared to the Uk tax office, they can then determine if it is truly furnished holiday lets.
They also will need to review his residency status to make sure no more than 90 days a year are spent in the UK for any one tax year. However the problem is that this relates back as far as 1975 - which creates a huge problem in him making a full disclosure to HMRC.
It may well be that his continued entitlement to UK personal allowances more than covers any taxable income that has arisen - but nonetheless he had a duty to declare this income.
As far as IHT is concerned you have already determined that as long as your father lives for more than 7 years from the date of making the gift - that it will be exempt from UK IHT - and the same applies if he sells and gives you the money. But he will incur a UK capital gain on either its sale or transfer as it will always remain a property that is not the main residence that is being disposed of.
- How much this is will be dependent on whether your father is deemed to be not resident for tax purposes in the UK (hereby only liable to tax that arises on income that arises in the UK) and whether the property is treated as furnished holiday lets (so a trade) or as rental income (so under Sch A laws) Under normal rental income rules when a property was sold or transferred the capital gains rules used to be that as long as more than 5 years non residency had been achieved then any capital gain would be liable in the country of residence, but since 06/04/2015 these laws have changed any the element of any gain that had arisen from 06/04/2015 to the date of sale/transfer will remin liable in the UK - and I have added a link here re the new legislation https://www.gov.uk/guidance/capital-gains-tax-for-non-residents-uk-residential-property
But if this is furnished holidays lets then the gain remains liable in the UK as linked to an operating trade which continues until such time that the property is disposed of (through sale or transfer) so the full gain will be liable but just at 10%
So you can see I am unable to give you a definitive answer as the income (whether trade or just rental income) has not been declared to HMRC for 41 years - and that will create a huge problem - then there is the question of residency as the laws on that also changed - and your father then used this property to live in on his return visits - as the new laws that came into play from 06/04/2013 and this looks at time in the Uk but also continuing ties and whether property was retained and used as a base - and this legislation (very detailed) is here https://www.gov.uk/government/publications/rdr3-statutory-residence-test-srt
So the years also have to be split from 1975 to 2013 for residency purposes and then from 1975 to 2015 for capital gain purposes, and then the rentals themselves between trade income or rental income as to how the gain should be treated in the first instance.
I feel your father need to engage representation to make a full disclosure to HMRC for him and to wade through each of the issues thereafter based on events (which for the period of time will be timely, which I am sure you can appreciate) to try and find the best tax solutions based on the facts., But I will advsie the penalties for non declaration are likely to be high.
Let me know if I can assist further -