Each new round of annual exams will always include topics that the F6 examining team have written about in their published technical articles, most notably in the Finance Act (FA) Update article (FA 2012) and in any new technical articles. For 2013 we have so far two such articles entitled Motor Cars and Benefits respectively.
Although any and all of what appears in the FA Update may feature in this year’s exams particular attention should be paid to new legislation and major changes to existing legislation.
In this respect note specifically:
(1) Overseas branches and the new exemption election, noting very carefully the worked example on evaluating whether or not the election would have been worthwhile for a company to have made.
(2) The recent reductions in the main rates of Corporation Tax (CT) mean that either a marginal or large company whose Chargeable Accounting Period spans two Financial Years will require a split calculation of their CT Liability. Again work the examples given. Note if this were tested within Question 2 then as Capital Allowances (CA) are not examinable for such a company straddling FY 2011 and FY 2012 then a detailed CA computation would need to be performed for an unincorporated trader presumably in Question 1.
(3) The changes in car benefits may be tested in a standard Employment Income assessment and also contain other benefits as per the Benefits article. Given the separate detailed article on Motor Cars this may instead form the basis of the more challenging style of question now favoured by the examining team where the candidate is required to think very carefully to answer a more unusual stated requirement.
This may involve for example evaluating the tax position of both the business (unincorporated or incorporated), and if separate, the individual, regarding the provision of a car and fuel to an employee or proprietor. This may involve elements of Income Tax, Corporation Tax and NIC’s. Once more work carefully through the exam standard example at the end of the article.
Income Tax – Question 1 probably 30 marks, and possibly part of Questions 4 or 5
- Preparation of Income Tax Computation(s) possibly for spouses / civil partners with exempt income, joint income and separate sources of employment income and trading profits
- Employment Income to include use of own car or company car
- Trading profit to require a detailed CA computation (if not tested in Q.2)
- NIC’s payable by each spouse
Corporation Tax – Question 2 probably 25 marks, and possibly included in Questions 4 or 5
- Preparation of CT Computation for CAP straddling FY’s 2011 and 2012
- Adjustment of profits
- Operating overseas through a subsidiary or a branch and evaluation of whether exemption election for overseas branches worthwhile
- Use of losses including group relief and implications of gains group membership
- Transition from normal due date to Quarterly Instalment Payments
Questions 1 & 2 will always require the candidate to prepare Income Tax Computation(s) and Corporation Tax Computation(s). You must learn these formats, bases of assessment and know the main exempt income sources. You will also be required to prepare an adjustment of profit statement and prepare a Capital Allowances Computation – again these formats and rules must be learned!!
Chargeable Gains – Question 3 for 15 marks and possible involvement in any other question
- Calculation of CGT liability for individual involving 18% and 28% tax rates along with gains qualifying for entrepreneurs’ relief 10% tax rate
- Availability and use of entrepreneurs’ relief and gift relief
VAT – 10 marks in Question 1 or 2, or up to whole of Question 4 or 5
- VAT return with output tax issues on discounts and impaired debts and recoverability of input tax including entertaining expenses and purchases of plant and machinery and cars
- Group VAT registration and advantages and disadvantages of companies joining
- Compulsory registration
IHT – Question 5 for between 5 and 15 marks
- Compute transfer of value
- Compute IHT on lifetime transfers arising on death with possible involvement of CLT made more than 7 years before death followed by computation of IHT on Death Estate
Other Sundry Topics
- Income Tax losses
- Assessments of partners with a change in partners
- Self Assessment
Candidates should also ensure that they have worked through all the technical articles from the examining team available on the ACCA website.
Students should never rely on F6 exam tips from any source as exam success is based on a sound knowledge of the basic rules that underpin the computations required for each tax and the ability to apply this knowledge within the 3 hours and 15 minutes available.
This is based on considerable practice of past examination questions which have been updated for Finance Act 2012 and by sitting a mock examination in the allotted time. It can be of little surprise that students fail exams if the last time they sat such an exam was when they failed at the previous sitting!
If any of the areas tipped should appear then this, if you are prepared, should be a bonus – you should not be expecting these areas and then be disappointed when they do not appear and therefore be immediately at a psychological low in the exam room!