Friday Five – 28 July – 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. What is a ‘demand and needs’ statement?
   1. Documentation used to allow the client to prioritise their requirements
   2. The IFA’s requirements in terms of charges for product or time
   3. A statement detailing the client’s needs with the reasons for recommendations
   4. A list of requirements for new clients with the services the client can expect

2. The directors of Harvest PLC have decided to reduce dividend payments. This was unexpected. What effect (if any) would you expect on their share price?
   1. No effect
   2. Increase in share price of Harvest PLC
   3. Overall decrease in share prices of the sector Harvest PLC operates in
   4. A reduction in share prices of Harvest PLC

3. Amanda is considering a future transfer of her son’s Child Trust Fund to a Junior ISA. She should be aware that: Tick all that apply.
   1. the tax position of the fund is the same for both products
   2. her son can withdraw the proceeds when he reaches 18
   3. payments are cumulative so can be made up in later years
   4. income generated of more than £100 will be taxed on her

4. If a company has an agreement to purchase its own shares on the death of a shareholder, subject to HMRC agreement the sale will normally count as:
   1. A trading receipt for corporation tax purposes
   2. A disposal for capital gains tax purposes
   3. A chargeable transfer for inheritance tax purposes
   4. A distribution for income tax purposes

5. Which of the following types of continuing pension income payable to a beneficiary would be paid out free of tax where the member dies before age 75?
   1. A lifetime annuity.
   2. A scheme pension from a defined contribution scheme paid in the form of an annuity.
   3. A scheme pension from a defined contribution scheme paid directly out of scheme assets.
   4. A scheme pension from a defined benefit scheme.

Answers

1. C – See R01 Study Text, Chp 5:2
   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. AB – See R03 Study Text, Chp 12
   Grab our taster mock exam paper for CII R03. Click here to download.

4. B – See R05 Study Text, Chp 10.2
   Grab our taster mock exam paper for CII R05. Click here to download.

5. A – See R08 Study Text, Chp 1
   Grab our taster mock exam paper for CII R08. 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!)