ACCA conference 2007 Examiner’s presentation on Paper P6 – Advanced taxation Slides 1 – 3 No additional comments Slide 4 Candidates need to be able to: 1. Provide practical relevant advice • It’s all about advising clients and the practical application of tax rules to client scenarios • It will help if candidates try to believe in the client scenarios presented in the exam • This will help them to give specific rather than general advice 2. Prepare professional documents • Professional skills marks – 4-5 in Section A • The marks are given for: • Using the appropriate format • Demonstrating evidence of planning within the answer • Presenting a logical flow of information within the answer 3. Identify issues • Think through the relevant taxes to decide which ones are relevant • Think through the rules of a tax and decide what may be relevant 4. Identify calculations • Calculations should be performed in order to achieve something • Be willing to start other than at the beginning of a proforma – e.g. to calculate the tax due on an additional amount of income (but not the whole of the client’s income tax liability) by using the marginal rate of tax • Be willing to stop other than at the end of a proforma – e.g. to determine the amount of taxable income (but not the income tax liability) in order to identify the tax rates applicable to capital gains tax • Calculations should be used to find the numerical information required to provide the client with the information requested
5. Communicate • Communication is one of the 5 major capabilities in the syllabus Need to think before starting – how am I going to solve this problem Follow any guidance given in the question Slide 5 The new syllabus: 1. Builds on Paper F6 • F6 is the foundation of P6 – the more work candidates do for F6 and the stronger they are, the easier P6 will be 2. Paper F6 knowledge is vital • F6 knowledge is vital – a question could be set where all of the technical content is from F6 • F6 technical content represents the building blocks for P6 • Candidates may find it useful to refresh F6 prior to starting P6 • Candidates need to be comfortable with F6 knowledge so that they can think about what needs to be done without agonising over the fundamental rules of the taxes 3. The commands in the Study Guide • Advise, identify, explain, evaluate etc • The commands indicate how an area may be examined – they are not exclusive • Most of the P6 syllabus is at level 3 – so anything can be asked on most areas 4. Whole syllabus examinable throughout • There are no excluded areas or core areas in any of the questions • The technical areas examinable at P6 but not at F6 will be examined regularly Slide 6 The new syllabus - Specific Minor changes • Trusts – no longer concerned with the taxation of trusts themselves – just transfers of assets into trust and the taxation of income received from a trust • PFP – no longer concerned with the regulatory framework or details of the giving of PFP advice (eg net worth calculation) – however, candidates will still be expected to make sensible comments, by reference to their client’s circumstances, on proposed financial actions • IHT – Post mortem reliefs are no longer examinable
Ethics and professional • Professional skills covered on slide 4 • Ethics could be examined in either section • To begin with, questions on ethics will be confined to the following areas: • Prospective clients • Conflicts of interest • Disclosure of information to HMRC • Money laundering • Tax irregularities • Tax avoidance and tax evasion • Around five marks (the examiner’s approach article states that ethics will account for two marks but this has since been increased to ‘around five’) Pilot Paper • Don’t look for themes here as regards the technical content of future questions • For example, it cannot be assumed that there will be a lengthy question on groups in the compulsory section of the paper in the future • The Pilot Paper is just an indication of the style of the questions Slides 7, 8 and 9 Format and example No additional comments Slide 10 Section A Multi tax questions • Candidates will need to analyse the information and identify what needs to be done to answer the question Report or letter • Answers will need to be prepared in report, letter, memorandum etc format • Professional marks will be available for using the correct format
Advice to candidates • Think before jumping in – follow any guidance on approach given in the question • Determine what calculations to prepare (eg work at the margin) • Think about how to perform the calculations efficiently - do not look on them as an end in themselves • Manage your time and address all of the requirements • Believe in the client and focus on their needs and wants – such that your answers are concise, practical, relevant, helpful and specific Slide 11 Section B • • Section B questions are very different in style from Section A Candidates should read the brief introduction at the beginning and then the requirement in order to identify which one of the three questions they do not intend to do
Concluding remarks 1. It will be important for candidates to have a strong knowledge of F6 2. They will also need a good knowledge of the material that is new at P6 3. Candidates must be willing to think about what needs to be done both in terms of relevant taxes and relevant calculations 4. Candidates will need to be time conscious and keep their answers brief and to the point so that they answer all parts of the questions