PETs becoming chargeable on death within 7 years

A man died last week. Three years before his death he gave £400,000 in cash to his adult son outright. He made no other lifetime gifts and the son still held the cash at the date of death. At death the man's estate was worth £500,000 and passed to his sister. The man had already used his available annual exemptions and had never married. His personal representatives are working out the inheritance tax position. The nil-rate band is £325,000 and the death rate is 40%. Which statement best describes the inheritance tax treatment of the £400,000 gift?