In this guide we will introduce you to the Tax Compliance exam. We will cover what the Tax Compliance exam is, what to expect when sitting the exam, what to look out for and how to prepare for the exam.
The exam is 2.5 hours in length and is structured into five questions.
The exam is 75% based on knowledge (with 25% skills) which means that it is highly important that you have devoted the time to learn the technical topics within the syllabus. The exam is very fair – if you have put the effort in you will pass, but equally if you do not make the effort this exam will catch you out. The pass mark is 55%.
What to expect when sitting the exam
The questions are largely computational, so it is vital that you learn the proformas e.g. adjustments to profit, capital allowances, inheritance tax calculations. This not only makes it easier to complete an answer in the allocated time, it also allows markers to follow through workings and allocate marks even where some mistakes are made.
There are some written requirements e.g. ethics and it is important that these are not overlooked as they can be some of the “easier” marks in the exam.
Each question is broken down into sub-requirements with a mark allocation shown. This gives you a great steer as to how long to spend (1.5 minutes per mark on average).
What to look out for
The topics most students struggle with are corporation tax (CT), inheritance tax (IHT) and VAT.
For CT it is vital that you learn the layout firstly of the adjustment to profit working and then secondly the CT computation itself. Many students confuse these and produce a hybrid which does not work and does not score well.
For IHT you must be clear on the treatment of potentially exempt transfers (PETs) and chargeable lifetime transfers (CLTs) and be able to calculate lifetime tax (on CLTs) and death tax (on PETs and CLTs). Learning the proformas is vital.
For VAT the key topics are – groups, property, partial exemption, capital goods scheme and international transactions. The questions are highly repetitive so practice is key.
Preparing for the Tax Compliance exam
You firstly need to become familiar with the syllabus – for many this will be a tuition course. Feel free to make some notes of your own, but do not spend too long doing this – a few one-page summaries of key topics should suffice. Then you need to get into the questions. Start with the self-test questions in the Study Manual and then progress to the exam standard questions in the question bank.