Other

Question 1

Explain how Penny can be removed as a trustee of the Will Trust due to the impact of her recent diagnosis of early-onset dementia. (2023-09)

Answer 1

• Penny could retire as a trustee whilst she remains mentally capable.
• If there are no express powers in the trust to remove a trustee
• Theo and Robin (the remaining trustees) could
• replace Penny as a trustee
• after she has lost mental capacity
• using the powers in section 36 Trustee Act 1925
• after approval from the Court of Protection (COP)
• or, failing that, a replacement trustee may be appointed by the Courts.

Question 2

compare gifting shares in limited company vs selling the shares

Answer 2

Gifting:
* Holdover relief can be claimed as gift of business assets/private company shares.
* No CGT is paid at the time.
* Market value is £250,000 less £10,000 cost = Chargeable gain of £240,000.
* Acquisition cost to Luka is reduced by £240,000.
* Luka will receive the shares with a base cost of £10,000 increasing the amount of any gain made by Luka on a future disposal.
* Luka and Agnete have to jointly claim holdover relief.
* Relief is only available if Luka is a UK resident in the tax year.

Selling:
* She will be liable for CGT.
* She can claim business asset disposal relief.
* This covers the first £1m of lifetime qualifying gains that she makes.
* She will pay 10% on the gain in excess of her available annual exempt amount.
* Gains are set against any unused basic rate band before non-qualifying gains.

Question 3

Explain how Theo’s return to the UK will affect the taxation of the gain on his onshore investment bond. (2023-09)

Answer 3

• The gain was not taxable in the 2021/2022 tax year
• as Theo was non-UK resident.
• The gain will be potentially subject to Income Tax
• in the tax year he returns to the UK
• as Theo’s period of non-UK residence was temporary.
• A time apportioned reduction will apply
• for the period/number of days he was non-UK resident.

Question 4

what companies qualify for VAT

Answer 4

• Have a permanent UK presence
  -listed on the stock exchange
  -all money raised by a VCT must be ‘used for the purpose of the qualifying activity’ within 2 years.
• Carry on a qualifying trade
• Have gross assets ≤ £15 million before investment and ≤ £16 million immediately after
• At least 80% of its investments must be in qualifying holdings, no more than 15% in any single company.
• less than 250 full time equivalent employee
  at least 10% of the total investment in any one company must be in ordinary shares.
  Maximum £5 million raised under VCTs in past 12 months.