The three-hour exam consists of five compulsory questions based on practical scenarios with students often required to produce a combination of numerical work and written explanations.
Don’t simply rote learn
Most of the questions involve multiple taxes or syllabus areas. Students will not always have to deal with an interaction of those taxes, although they may need to move from one tax to another to satisfy the full requirements – and marks – of the question. It means you can’t simply rote learn answers to questions. Instead, you need to be able to spot scenarios and formulate your answer accordingly. Marks will be awarded to students who successfully apply knowledge to those scenarios and are able to make appropriate recommendations within that context.
Don’t ignore VAT
As a key tax, it’s likely that VAT will crop up in the exam. It interacts a lot with other taxes, particularly with stamp taxes but it can also crop up in capital allowances computations, and adjustments of profits. It is a decent chunk of the syllabus – potentially up to 20% with stamp taxes – so when it comes to studying, don’t ignore it.
Ethics can crop up in any scenario
In the Tax Compliance and Planning exam, it’s about recognising the ethical implications of a particular scenario and being able to understand the need for specific actions. We don't want students rolling out a list of 25 generic things that won't gain them credit. They need to be able to identify what a specific issue is.
For example, if somebody is evading tax, look at the money laundering consequences for them and what actions as a professional we may need to take. It may be that there's a finance director who is subject to our ethical code who needs to take action. Make sure your focus is specific to the relevant person.
Don’t neglect admin
The administration component of the exam covers the procedural and operational mechanics of the UK tax system. Questions may, for example, require you to look at somebody's corporation tax, and prepare a computation, look at loss relief, but they may also have submitted a return late. Once again, it’s about application in the context of that scenario. Admin will never represent a huge number of marks – ethics, law, and admin together make up 10% to 20% – so don't make it hard for yourself by neglecting this aspect of the exam.
Question practice is key
Once you have a base level of knowledge to properly attempt questions, the question bank is your friend. Practice as many questions as you possibly can, spread across the entire syllabus. If you focus on 30 questions and they’re all from two syllabus areas, there’s a danger that won’t give you the breadth of practice you need to ensure success. Send your practice questions to your tutors. Although they won't necessarily mark every one of them, they should be able to give you some good pointers. Or try swapping questions with your peers. Verbalising your answers and explaining your thought processes to other students is another useful way to cement learning.
Prepare scenarios
Make sure you know exactly which scenarios different reliefs or exemptions fit into. For example, with capital gains tax, there's potential for rollover relief, gift relief or business asset disposal relief amongst others. For inheritance tax, relevant reliefs include business property relief, fall in value relief, quick succession relief. Do the same for corporation tax and so on. And think about which reliefs apply to individuals versus companies.
Look out for triggers in the exam questions. For example, if the question is about selling shares think about whether there's a relief or an exemption relating to that.
Think about what the examiners want
Every question is broken down into more than one requirement – they may be independent of each other, and sometimes they’re linked. What typically trips students up is if they fail to recognise what a scenario is looking for. The key is to make sure you understand the requirement so you focus on what the examiners are looking for.
For example, in one exam, there was a question on losses that applied specifically on incorporation. It was only worth two marks. But many people failed to score any marks because they focused their answers on the capital gains elements of incorporation.
Don’t expect a full computation on every tax
Do not expect there to be a full computation on every tax in every exam. There won’t always be a big computation on inheritance tax, or income tax, or corporation tax.
Pay attention to the marking scheme
The marking scheme will give you a good indication of how much attention – and words – to devote to answers. This is a three-hour exam – that's 1.8 minutes per mark on the 100 marks, but aim for 1.5/1.6 minutes to give yourself some review time at the end and planning time upfront. Use that as a guide as to how much you will need to do. For example, two lines on a nine-mark question probably isn't going to get you a pass on that question.
Practice under exam conditions
The Tax Compliance and Planning exam isn’t designed to be overly time pressured but factoring in the additional stress of an exam situation, it can be a completely different experience and it’s easy to lose track of time. Get used to that feeling by practising as many questions as possible to time and within the exam software. See how much you can get done on a question in a restricted period of time. You can access the practice software and other exam resources at icaew.com/examresources
