This could have worked many years ago, but in the light of recent legislation, it is no longer possible for two reasons.
1. There is anti avoidance legislation which prevents any debt which was derived from the property of the deceased being deducted from their estate.
2. If a person benefits from any property which has previously owned, and the gift with reservation rules do not apply, then there is a pre owned assets tax charge.
There was a very famous case a few years ago called Lady Ingram which used loan notes and trusts to get around the gifts with reservation rules. Unfortunately for HMRC it worked and so many such schemes were set up. The pre owned assets tax legislation was put in place to counter that scheme and many others similar to that.