Richard Poole gives some key tips on how to avoid the common pitfalls in ACCA’s Advanced taxation exam.
ATX exam structure
The structure of the ATX exam is predictable. Section A consists of 60 marks (one question worth 35 marks and one question worth 25 marks). Section B consists of two 20-mark questions.
Breakdown of questions
Section A and B are broken down into multiple parts to help you break the question down into bite-size pieces. There are always up to four Professional marks available in Question 1.
Up to four professional marks are always given in Question 1 for:
a. Problem solving.
b. Clarity of explanations and calculations.
c. Effectiveness of communication.
d. Presentation and style.
These are ‘easy’ marks when you are shown what they mean. If you can achieve four out of 35 you are already 11% of the way to a pass (17.5 marks) in Question 1!
Core areas regularly tested
The whole syllabus is in scope and testable. However, when I recently analysed four years’ worth of past exam questions, the following areas were commonly tested:
• Corporate, groups, overseas and consortia.
• Capital taxes.
• Business change scenarios.
• Unincorporated businesses.
• Family company issues.
• Personal finance, business finance and investments.
• Multi tax personal (including overseas).
Technical areas to be comfortable with In terms of how you get ready for the core areas below, in my experience here are some of the syllabus areas that are commonly not understood well enough by students.
• Domicile – IHT, CGT. Understanding the status of an individual and the implications of this status.
• Deemed domicile – recent change in definition. Make sure you know the most up-to-date definition.
• Residence and Domicile – knowing the residence rules and how the residence and domicile status of an individual impacts the Remittance basis versus the Arising basis.
• Corporation tax losses – knowing the new rules regarding carrying forward of losses and how these interact with the old rules.
• Groups/consortia – knowing the definitions and the implications of:
• Loss groups
• Gains groups
• VAT groups
• Substantial Shareholding Exemption – know the definition, this has changed recently.
• Reliefs – IHT/CGT. Know the different conditions and what qualifies for the reliefs.
You can score very quickly by knowing which relief(s) are available to improve an individual’s tax position.
10 tips to pass ATX
Here are few things to remember to be successful in this paper:
i. Time management: 1.8 minutes per mark must be applied to every question. NEVER overrun on time! Learn to stop when time is up on a part or question. Fresh marks are available in new questions, so you must keep moving.
ii. Presentation: Your script must be tidy and well presented. Use three to four-line paragraphs and headings. Ask yourself, ‘Would I present this to someone at work?’.
iii. Plan: Do a brief (five-10 minute) answer plan for EVERY question. Sometimes it can feel like this is a waste of time, but it is not and will improve the structure and content of your answer.
iv. Quality over quantity: You must write good points, not lots of points. Do not just repeat yourself.
v. Read the requirements first: Understand what is being asked, not what you want to be asked. Follow the instructions.
vi. Calculations v Narrative: Explain what you are doing. Calculations back this up.
vii. State conditions and rules that you are following: Sometimes it feels ‘too obvious’ to state the basics. What does ‘base cost’ mean to someone who does not work in tax every day? Explain your thought processes.
viii. Remember that 49+1 = a pass! You must ‘play the game’ (see below).
ix. Practise questions and read the examiner’s comments: This is key to understanding where students struggle.
x. Read the technical articles: A technical article has been written for pretty much every area of ATX. These are helpful to help you understand the areas individually.
‘Play the Game’
I have lost count of how many times I have heard students say, ‘That was a hard exam’. Is there such a thing as a ‘hard exam’? The answer is NO if you have solid exam technique.
Let us look at Question 2 in the June 19 Exam as an example. It was a 25-mark question so 12.5 marks were needed to pass.
Part 1: (17 marks) Challenging group relief question.
Part 2: (3 marks) Implications of forming a VAT group.
Part 3: (5 marks) Ethics – explain tax evasion.
a. What would the student with poor exam technique do?
• Attempt Part 1 first.
• Try to do the difficult numbers.
• Over-run on time.
• Start to panic.
• Run out of time for Part 2 and Part 3.
• Fail the question and as a result does badly in the rest of the exam.
b. What does the student who knows how to ‘play the game’ do?
• Attempt Part 2 and Part 3 first – get the easy eight marks
• Spends the rest of the time (relaxing!), finding 4.5 easy marks out of 17 marks available in Part 1.
There were (by the way) some ‘easy’ marks in Part 1. Like doing a basic capital allowances computation (for four marks). But students don’t see ‘easy’ marks within a question that has ‘hard’ aspects if you are under pressure because of poor exam technique!
How do you pass ATX?
Generally, successful students have done a course focusing on question practice and exam technique. This is because you must learn how to ‘play the game’. Even if you know all of the rules, it doesn’t mean that you can apply them to a scenario.
Make sure you understand the Test Reach Software
• Make each point in a separate paragraph in written sections – it makes it easier to mark a point. It should also prevent the same point being made more than once.
• Use a well-structured layout with appropriate workings in numerical areas. It should be easy to see how a figure from a working fits into the main computation.
• Understand the spreadsheet functionality. CBE spreadsheets have the functionality to calculate numbers for you. However, make it clear to your marker what you have done. Just because you are working in a spreadsheet, does not negate the need to properly present your answers.
• Copy and paste functionality. It is amazingly effective to take the requirements and use these as the headings in your word processor response.
• Headings and blank lines/columns – make appropriate use of headings between workings.
• Practice in the software. It is important that you are familiar with the spreadsheet functions and word processor functionality before the exam.
Three separate exams within ATX!
Students often do not realise that they are sitting three separate exams.
1: You need to understand the technical aspects and the patterns of the past exams.
2: You need to understand the exam technique and how to ‘play the game’.
3: You need to understand the ACCA CBE Test Reach software.
If you are weak with any of these areas, you will find ATX more challenging that it needs to be.
• Richard Poole is an ATX and AAA specialist tutor at FME Learn Online.