Friday Five – 30 December – 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

These questions relate to examinable tax year 2016/17, examinable until 31 August 2017.

1. What is the definition of a beneficiary who has a contingent interest under a trust?
   1. A beneficiary who is entitled to income from trust assets, but not the capital
   2. A beneficiary who cannot exercise control over the trust assets
   3. A beneficiary whose entitlement is dependent on something else happening first
   4. A beneficiary who shares entitlement to trust assets with other beneficiaries

2. A new competitor enters the market producing essentially the same product as an existing manufacturer. What type of risk is this an example of?
   1. Non-systematic risk
   2. Systematic risk
   3. Market risk
   4. Diversification risk

3. What happens to ‘excluded property’ trusts in the event of the settlor subsequently becoming UK domiciled?
   1. The trust assets remain protected from Inheritance Tax (IHT)
   2. The trust becomes part of the settlor’s worldwide assets and is liable to IHT
   3. The trust is subject to IHT but relief given for the period the settlor was a non-UK domicile
   4. If at least one of the trustees is UK resident, then the domicile status of the settlor has no effect

4. Martin’s registered pension fund is being transferred to a QROPS. The transfer is in excess of his lifetime allowance. What lifetime allowance charge will apply to the excess before the funds are transferred?
   1. 55%.
   2. 45%.
   3. 40%.
   4. 25%.

5. If a company has total sales of £1m, administration costs of £25,000, sales costs of £650,000 and a tax liability of £40,000, what is their operating profit?
   1. £975,000
   2. £935,000
   3. £350,000
   4. £325,000

Answers

1. C – See R01 Study Text, Chp 3
   Grab our taster mock exam paper for CII R01. Click here to download.

2. A – See R02 Study Text, Chp 3
   Grab our taster mock exam paper for CII R02. Click here to download.

3. A – See R03 Study Text, Chp 12
   Grab our taster mock exam paper for CII R03. Click here to download.

4. D – See R04 Study Text, Chp 2.2
   Grab our taster mock exam paper for CII R04. Click here to download.

5. D – See J12 Study Text, Chp 8
   Grab our taster mock exam paper for CII J12. 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!)