Friday Five – 7 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. What must a firm establish before it can appoint someone as an appointed representative (AR)? Tick all that apply.
   1. The appointment won’t prevent the firm from satisfying the threshold conditions
   2. The firm has adequate controls over the person’s regulated activity
   3. The AR is already, and will continue to be, an authorised person
   4. The AR will act solely by making introductions and distributing advertisements
   5. The AR is solvent

2. As an adviser, you have been asked to explain the Capital Gains Tax (CGT) implications for the trustees of a bare trust. You explain that: Tick all that apply.
   1. the trustees will be liable to CGT at a rate of 10%
   2. any chargeable gains are usually treated as the beneficiary’s
   3. the trustees will have a standard rate band of £1,000 to offset against gainss
   4. the beneficiary is liable for any CGT and can use the full annual exempt amount

3. Molly was entitled to a tax-free cash sum of £400,000 at A-day, based on her £1m total pension fund. Upon crystallising benefits in 2016/17; enhanced protection of her £2m fund would result in a tax free lump sum of:
   1. £400,000.
   2. £800,000.
   3. £720,000.
   4. £500,000.

4. How are the dividends from preference shares taxed?
   1. They are ineligible for inclusion in the dividend allowance, but other than that are taxed in the same was as other dividends
   2. They are eligible for inclusion in the dividend allowance and are taxed in the same way as other dividends
   3. They are treated as payments of interest and taxed as such
   4. They are treated as payments of interest but are not taxable on the investor

5. Amy has telephoned her bank for mortgage advice. How may the initial disclosure requirement be met?
   1. Electronically
   2. In writing
   3. Orally
   4. By post

Answers

1. ABE – See R01 Study Text, Chp 6
   Grab our taster mock exam paper for CII R01. Click here to download.

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

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

4. B – See J12 Study Text, Chp 1
   Grab our taster mock exam paper for CII J12. Click here to download.

5. C – See R07 Study Text, Chp 2
   Grab our taster mock exam paper for CII R07. 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!)