THE CHARTERED INSTITUTE OF TAXATION
APPLICATION AND PROFESSIONAL SKILLS
Inheritance Tax, Trusts & Estates
November 2021
TIME ALLOWED
3 HOURS 30 MINUTES
• In order to secure a pass in this exam, you will be required to demonstrate competence in each of
three skills.
You will be assessed across your answer as a whole for Structure. A pass or fail grade will be
awarded.
You will be assessed for competence in a number of broad topics for the following skills:
➢ Identification and Application
➢ Relevant Advice and Substantiated Conclusions
For each topic for each of these two skills, a grade will be awarded. The grades for those topics will
be weighted and averaged to produce a final grade for each skill of 0, 1, 2, 3 or 4. A grade of 3 or 4
is required to demonstrate competence.
• All workings should be shown and made to the nearest month and pound unless the question specifies
otherwise.
• Candidates who answer any law elements in this paper in accordance with Scots law or Northern
Ireland law should indicate this where relevant.
• Scots law candidates may provide answers referring to Land and Buildings Transaction Tax rather
than Stamp Duty Land Tax.
• Except as set out below or indicated by additional information in the question, you may assume that
2020/21 legislation (including rates and allowances) continues to apply for 2021/22 and future years.
1) You MUST assume that the UK remains within the European Union.
2) You MUST ignore all temporary Covid related legislation including furlough, grants, loans and the
reductions in VAT and SDLT rates.
Except in relation to points 1) and 2) above, candidates answering by reference to more recently
enacted legislation or tax cases will not be penalised.
• You must type your answer in the space on the screen as indicated by the Exam4 guidance.
,You are a tax senior in a firm of Chartered Tax Advisers. Your Tax Partner, Lucy Evans, has received an
email (EXHIBIT A) from a longstanding client, Mrs Emily Taylor.
Emily has received advice previously regarding lifetime Inheritance Tax planning, but no action has yet
been taken.
Lucy has asked you to review the email alongside the updated asset listings (EXHIBIT B) and the copy
of Emily’s Will (EXHIBIT C) before preparing a draft report to Emily addressing her queries.
The following exhibits are provided to assist you:
EXHIBIT A: Email from Emily Taylor to Lucy Evans
EXHIBIT B: Valuation of Emily Taylor’s assets
EXHIBIT C: A copy of Emily Taylor’s Last Will and Testament
EXHIBIT D: Pre-seen information
Requirement:
Prepare a draft report to Emily Taylor, for review by Lucy Evans, which advises on the tax
implications of her plans and any tax efficient steps that she may be able to take.
Continued
Page 2 of 8 APS IHTTE
,Continuation
EXHIBIT A
Email from Emily Taylor to Lucy Evans
From: Emily Taylor <’’.
To: Lucy Evans <’’>
Date: 1 November 2021 06:37am
Subject: My Health and Inheritance Tax
Dear Lucy
I regret that I must share with you that I have received further news regarding my health. My illness has
returned. The doctors do not believe they can do anything other than improve my quality of life over the
coming months. They are almost certain that I only have between 12 and 18 months to live. My mental
capacity will remain, but I will grow physically weaker as the months progress.
I write to let you know and also because I would like some advice. You will remember we reviewed my
Inheritance Tax position a few years ago and it was recommended to me that I gift my holiday home (49
Beach View) to my two daughters equally, to begin to mitigate my tax exposure.
I never did get around to carrying out this transfer, nor any other lifetime gifting. Given the current
circumstances I am planning to gift 49 Beach View to my two daughters, Charlotte and Susan, in equal
shares as soon as possible. I have spoken with them about this and they will sell the property in the next
year or so as they do not want to retain it.
In addition to 49 Beach View, I also want to give both of my daughters £250,000 each in cash as soon as
possible. You will remember that my husband left our children £255,000 between them on his death via
his Will. He then left the residue of his estate to me. It gave me great comfort at the time to watch them
enjoying the money then and I want to do this now so that I can see them enjoy the money once more.
Once again, I have already spoken with Charlotte and Susan about this. Charlotte is very happy to accept
and has given me her bank details. Susan is very upset about everything and has said that she does not
want to receive anything. I do not really want to delay Charlotte’s gift and I will speak to Susan in the New
Year. I am sure she will accept the gift in January after everything has been absorbed a little.
I also want to give £50,000 in cash to our local hospice, which is a UK registered charity, but I am unsure
of whether to do this now or allow the gift to pass via my Will. I would prefer to give it to them now, but I
will wait if you advise me to.
I will arrange for an updated copy of my asset listings to be sent over by my Financial Adviser and I will
also send you a copy of my most recent Will. Can you please review these documents and advise of any
problems you can foresee or opportunities you can identify to mitigate Inheritance Tax. I do of course
appreciate that my options are very limited at this stage.
As always, equality is paramount to me. I insist that my two daughters inherit everything equally between
the two of them. I do not want either of my grandchildren to inherit directly from me as they are both a
little immature at present. I would prefer it if Charlotte and Susan make provision for them and they will
take advice on this at another time.
I look forward to hearing from you soon.
Warmest regards
Emily Continued
Page 3 of 8 APS IHTTE
, Continuation
EXHIBIT B
Valuation of Emily Taylor’s assets
Assets held (updated 1 November 2021)
Land and Property
Address Detail Date of Cost Market Value
Purchase
£ £
Rosewood Cottage Main Residence 14/09/2015 400,000 500,000
Nottingham
NG14
49 Beach View Holiday home. Let out to 09/03/2004 180,000 600,000
Cornwall the public. Qualifies as a
TR7 Furnished Holiday Let.
The only services
available to guests are a
laundry service and food
basket upon arrival, both
services are optional.
Subtotal – Land and Property 580,000 1,100,000
Bank account balances £
UK Current account 45,000
UK Savings account 820,000
Subtotal – Bank account balances 865,000
Investments
Investment Detail Date of Cost Market Value
investment
£ £
Stock and Shares main All listed shares (no 17/01/1995 250,000 610,000
account control)
Stocks and Shares ISA All listed shares (no 12/01/2016 50,000 75,000
account control)
National Savings Premium Bonds 12/12/2019 50,000 50,000
Subtotal – Investments 350,000 735,000
Total assets £2,700,000
Continued
Page 4 of 8 APS IHTTE
APPLICATION AND PROFESSIONAL SKILLS
Inheritance Tax, Trusts & Estates
November 2021
TIME ALLOWED
3 HOURS 30 MINUTES
• In order to secure a pass in this exam, you will be required to demonstrate competence in each of
three skills.
You will be assessed across your answer as a whole for Structure. A pass or fail grade will be
awarded.
You will be assessed for competence in a number of broad topics for the following skills:
➢ Identification and Application
➢ Relevant Advice and Substantiated Conclusions
For each topic for each of these two skills, a grade will be awarded. The grades for those topics will
be weighted and averaged to produce a final grade for each skill of 0, 1, 2, 3 or 4. A grade of 3 or 4
is required to demonstrate competence.
• All workings should be shown and made to the nearest month and pound unless the question specifies
otherwise.
• Candidates who answer any law elements in this paper in accordance with Scots law or Northern
Ireland law should indicate this where relevant.
• Scots law candidates may provide answers referring to Land and Buildings Transaction Tax rather
than Stamp Duty Land Tax.
• Except as set out below or indicated by additional information in the question, you may assume that
2020/21 legislation (including rates and allowances) continues to apply for 2021/22 and future years.
1) You MUST assume that the UK remains within the European Union.
2) You MUST ignore all temporary Covid related legislation including furlough, grants, loans and the
reductions in VAT and SDLT rates.
Except in relation to points 1) and 2) above, candidates answering by reference to more recently
enacted legislation or tax cases will not be penalised.
• You must type your answer in the space on the screen as indicated by the Exam4 guidance.
,You are a tax senior in a firm of Chartered Tax Advisers. Your Tax Partner, Lucy Evans, has received an
email (EXHIBIT A) from a longstanding client, Mrs Emily Taylor.
Emily has received advice previously regarding lifetime Inheritance Tax planning, but no action has yet
been taken.
Lucy has asked you to review the email alongside the updated asset listings (EXHIBIT B) and the copy
of Emily’s Will (EXHIBIT C) before preparing a draft report to Emily addressing her queries.
The following exhibits are provided to assist you:
EXHIBIT A: Email from Emily Taylor to Lucy Evans
EXHIBIT B: Valuation of Emily Taylor’s assets
EXHIBIT C: A copy of Emily Taylor’s Last Will and Testament
EXHIBIT D: Pre-seen information
Requirement:
Prepare a draft report to Emily Taylor, for review by Lucy Evans, which advises on the tax
implications of her plans and any tax efficient steps that she may be able to take.
Continued
Page 2 of 8 APS IHTTE
,Continuation
EXHIBIT A
Email from Emily Taylor to Lucy Evans
From: Emily Taylor <’’.
To: Lucy Evans <’’>
Date: 1 November 2021 06:37am
Subject: My Health and Inheritance Tax
Dear Lucy
I regret that I must share with you that I have received further news regarding my health. My illness has
returned. The doctors do not believe they can do anything other than improve my quality of life over the
coming months. They are almost certain that I only have between 12 and 18 months to live. My mental
capacity will remain, but I will grow physically weaker as the months progress.
I write to let you know and also because I would like some advice. You will remember we reviewed my
Inheritance Tax position a few years ago and it was recommended to me that I gift my holiday home (49
Beach View) to my two daughters equally, to begin to mitigate my tax exposure.
I never did get around to carrying out this transfer, nor any other lifetime gifting. Given the current
circumstances I am planning to gift 49 Beach View to my two daughters, Charlotte and Susan, in equal
shares as soon as possible. I have spoken with them about this and they will sell the property in the next
year or so as they do not want to retain it.
In addition to 49 Beach View, I also want to give both of my daughters £250,000 each in cash as soon as
possible. You will remember that my husband left our children £255,000 between them on his death via
his Will. He then left the residue of his estate to me. It gave me great comfort at the time to watch them
enjoying the money then and I want to do this now so that I can see them enjoy the money once more.
Once again, I have already spoken with Charlotte and Susan about this. Charlotte is very happy to accept
and has given me her bank details. Susan is very upset about everything and has said that she does not
want to receive anything. I do not really want to delay Charlotte’s gift and I will speak to Susan in the New
Year. I am sure she will accept the gift in January after everything has been absorbed a little.
I also want to give £50,000 in cash to our local hospice, which is a UK registered charity, but I am unsure
of whether to do this now or allow the gift to pass via my Will. I would prefer to give it to them now, but I
will wait if you advise me to.
I will arrange for an updated copy of my asset listings to be sent over by my Financial Adviser and I will
also send you a copy of my most recent Will. Can you please review these documents and advise of any
problems you can foresee or opportunities you can identify to mitigate Inheritance Tax. I do of course
appreciate that my options are very limited at this stage.
As always, equality is paramount to me. I insist that my two daughters inherit everything equally between
the two of them. I do not want either of my grandchildren to inherit directly from me as they are both a
little immature at present. I would prefer it if Charlotte and Susan make provision for them and they will
take advice on this at another time.
I look forward to hearing from you soon.
Warmest regards
Emily Continued
Page 3 of 8 APS IHTTE
, Continuation
EXHIBIT B
Valuation of Emily Taylor’s assets
Assets held (updated 1 November 2021)
Land and Property
Address Detail Date of Cost Market Value
Purchase
£ £
Rosewood Cottage Main Residence 14/09/2015 400,000 500,000
Nottingham
NG14
49 Beach View Holiday home. Let out to 09/03/2004 180,000 600,000
Cornwall the public. Qualifies as a
TR7 Furnished Holiday Let.
The only services
available to guests are a
laundry service and food
basket upon arrival, both
services are optional.
Subtotal – Land and Property 580,000 1,100,000
Bank account balances £
UK Current account 45,000
UK Savings account 820,000
Subtotal – Bank account balances 865,000
Investments
Investment Detail Date of Cost Market Value
investment
£ £
Stock and Shares main All listed shares (no 17/01/1995 250,000 610,000
account control)
Stocks and Shares ISA All listed shares (no 12/01/2016 50,000 75,000
account control)
National Savings Premium Bonds 12/12/2019 50,000 50,000
Subtotal – Investments 350,000 735,000
Total assets £2,700,000
Continued
Page 4 of 8 APS IHTTE
