|PART ONE -
The Nil-Rate Band
Question 1: Brian & Janet are planning the disposal of their estate
and have consulted you with a view to drawing up their wills. They want
to minimise their exposure to IHT, mainly for the sake of their son Darren.
They own their home as beneficial tenants in common. Brian also has shares
in a FTSE tracker worth £300,000. They ask you what the current
nil-rate band is?
Question 2: They make identical wills. Each will states that there
should be a legacy to Darren up to the maximum of the nil-rate band,
while the residue goes to the other spouse. Their home is subject to
an outstanding mortgage of £30,000. The house on the right was
sold for £330,000, but the house on the left was repossessed for
£300,000. What value would the Revenue attribute to their home?
Question 3: Which part of the Finance Act 2008 allows the nil-rate
band to be transferred between spouses?
A section 103
B schedule 4
C section 247
PART TWO - Keeping an Interest
Question 4: Brian dies leaving his share of the home to Janet. Darren
receives the nil-rate band legacy. Janet decides to make sure that no
inheritance tax can be charged on the home, by transferring it into
Darren's name, and relying on a private agreement to continue living
their until her death. Why might this fail?
A because it amounts to a settlement
B because it is a gift with reservation of benefit
C because it gives rise to a discretionary trust
Question 5: If she falls foul of pre-owned assets tax, what rate of
tax if payable?
B the same rate as income tax
Question 6: Upon Janet's death, you make a mistake in completing form
IHT 200. In which of the following circumstances can the Revenue impose
a penalty on you?
A if you have acted negligently
B only if you have acted fraudulently
C the client would be liable to a penalty but not the solicitor