The tax implications of the two gifts are considered in part 3 of this article. Commercial matters would also have to be considered; particularly in relation to the introduction of a new shareholder in Adventure Ltd, a company controlled by Edward.
Before you read part 3, you should think through the headings that would be necessary in order to address the IHT and CGT implications of the proposed gifts and identify as many of the issues as you can.
You need to have a strong, well-structured knowledge of the IHT and CGT rules in order to deal with a question in the exam. You also need to be able to explain the potential tax implications of a transaction clearly and logically.
When addressing the tax issues you should stop and think before you start writing and note down briefly the points you intend to make. Then make sure that you make all of the points in the time available.
Written by a member of the Paper P6 examining team
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