Q on Lecture

We do it the way I showed you to ensure that we score all the marks!!
It is important to show that the gain is based on OMV irrespective of whether it is an outright gift or a sale at undervalue, that the donor is then denied gift relief to the extent that actual proceeds exceed cost and that the gift relief claim reduces the base cost of the donee from what would have been the OMV of the asset without such a claim.
In this situation that part of the gain that crystallises on the donor will be taxable but if the asset ALSO qualifies for entrepreneurs relief then the taxable gain will be taxed at 10%.
As gift relief is applied first the deferred gain reduces the donee’s base cost and therefore increases the future gain that may be made by the donee. If the donee does not then qualify for entrepreneurs relief, for example on shares in a trading company is NOT an employee, then the gain that would have been taxed at 10% on the donor may then be taxed at 28% on the donee!!
We can all do numerical short cuts but these will not show the examiner your understanding of the basic principles and if you make a numerical mistake you run the risk of scoring very few marks as you have not demonstrated your knowledge. If, however you are answering a MCQ then only the correct answer matters so as long as it works you can compute the answer any way you like!

Thanks Victoria you should suggest that to the very hard working administrator who keeps this site going!