Friday Five – 21 April – 5 Questions in 5 Minutes

Welcome to this week’s Friday Five – 5 Questions in 5 Minutes Every Friday

What’s this all about?

It’s a bit of Friday Fun where we provide you with 5 questions relevant to a mix of CII exams. The challenge is for you to answer them in 5 minutes. Answers at the bottom of the page.

Questions

IMPORTANT!  These questions relate to examinable tax year 2016/17, examinable by the CII until 31 August 2017.  They do not relate to tax year 2017/18 which is only examinable by the CII from 1 September 2017.

1. Why is income and expenditure information especially important under the “know your customer rules”? Tick all that apply
   1. To ascertain if the client is able to pay a fee
   2. To establish if the client is likely to provide referrals
   3. Affordability of recommendations
   4. Understanding entitlements to State benefits

2. Ironstone has retained profits of £750,000 after paying £175,000 in dividends (each) to both their ordinary and preference shareholders. What is their dividend cover?
   1. 3.29 times
   2. 4.29 times
   3. 6.29 times
   4. 5.29 times

3. Caroline is one of 4 trustees for the Elliott family trust. She lives in Spain although all the other trustees are UK resident. What is her liability regarding any tax liability arising from the trust?
   1. As she is not the nominated person to deal with HMRC she has no accountability
   2. Caroline would be liable for one quarter of any trust liabilities
   3. Caroline is jointly liable for the full amount of any tax that is due
   4. As Caroline lives in Spain the trust is not liable to UK tax

4. Why might an employee view a contract-based pension scheme as a less valuable benefit than a trust-based pension scheme?
   1. Basic rate tax relief on contributions is not obtained immediately but instead via self- assessment.
   2. Early leavers lose employer contributions in the event of transfer within 2 years.
   3. Because the scheme has been outsourced to a third party and does not provide members with the protection of trustees.
   4. Because the scheme is unlikely to offer drawdown options at retirement.

5. Which of the following people should be able to claim carer’s allowance?
   1. Jenna, who is aged 15 and a school student, who spends approximately 40 hours per week caring for her disabled mother
   2. Brian, aged 40, who has a part-time job earning £90 per week, who spends 20 hours a week caring for his elderly mother
   3. Karen, aged 55, who is unemployed and spends approximately 42 hours per week caring for her disabled son who is in receipt of disability living allowance
   4. Fred, aged 80, who receives State Pension of £119.30 per week, and is the full-time carer of his wife Doris who he lives with in the family home

Answers

1. CD – See R01 Study Text, Chp 7
   Grab our taster mock exam paper for CII R01. Click here to download.

2. D – See R02 Study Text, Chp 1:2
   Grab our taster mock exam paper for CII R02. Click here to download.

3. C – See R03 Study Text, Chp 1
   Grab our taster mock exam paper for CII R03. Click here to download.

4. C – See R04 Study Text, Chp 5
   Grab our taster mock exam paper for CII R04. Click here to download.

5. C – See CF8 Study Text, Chp 7
   Grab our taster mock exam paper for CII CF8. Click here to download.

How did you find this week’s questions? Did you complete them in 5 minutes? Did you get them all correct? Do you disagree with any?

Do let us know by leaving a comment below – we promise to read them all. (Humour particularly appreciated on a Friday!)