Advanced Taxation S18 - ACCA Qualificationfuture.accaglobal.com/assets/documents/advanced-taxation-september...June 2018 to March 2019 Advanced Taxation Syllabus and Study Guide

June 2018to March

2019

AdvancedTaxation

Syllabus and Study Guide

Advanced Taxation

© ACCA 2018-2019 All rights reserved.

The structure of thesyllabus and study guide

Relational diagram of AdvancedTaxation with other exams

This diagram shows direct and indirectlinks between this exam and otherexams preceding or following it. Someexams are directly underpinned byothers such as Advanced PerformanceManagement by PerformanceManagement. These links are shown assolid line arrows. Other exams only haveindirect relationships with each othersuch as links existing between theaccounting and auditing exams. Thelinks between these are shown asdotted line arrows. This diagramindicates where you are expected tohave underpinning knowledge andwhere it would be useful to reviewprevious learning before undertakingstudy.

Overall aim of the syllabus

This explains briefly the overall objectiveof the syllabus and indicates in thebroadest sense the capabilities to bedeveloped within the exam.

Main capabilities

The aim of this syllabus is broken downinto several main capabilities whichdivide the syllabus and study guide intodiscrete sections.

Relational diagram of the maincapabilities

This diagram illustrates the flows andlinks between the main capabilities(sections) of the syllabus and should be

used as an aid to planning teaching andlearning in a structured way.

Syllabus rationale

This is a narrative explaining how thesyllabus is structured and how the maincapabilities are linked. The rationalealso explains in further detail what theexamination intends to assess and why.

Detailed syllabus

This shows the breakdown of the maincapabilities (sections) of the syllabusinto subject areas. This is the blueprintfor the detailed study guide.

Approach to examining the syllabus

This section briefly explains thestructure of the examination and how itis assessed.

Study Guide

This is the main document that students,learning and content providers shoulduse as the basis of their studies,instruction and materials. Examinationswill be based on the detail of the studyguide which comprehensively identifieswhat could be assessed in anyexamination session. The study guide isa precise reflection and breakdown ofthe syllabus. It is divided into sectionsbased on the main capabilities identifiedin the syllabus. These sections aredivided into subject areas which relate tothe sub-capabilities included in thedetailed syllabus. Subject areas arebroken down into sub-headings whichdescribe the detailed outcomes thatcould be assessed in examinations.These outcomes are described usingverbs indicating what exams may

Advanced Taxation


require students to demonstrate, and thebroad intellectual level at which thesemay need to be demonstrated(*see intellectual levels below).

Intellectual Levels

The syllabus is designed toprogressively broaden and deepen theknowledge, skills and professionalvalues demonstrated by the student ontheir way through the qualification.

The specific capabilities within thedetailed syllabuses and study guides areassessed at one of three intellectual orcognitive levels:

Level 1: Knowledge andcomprehension

Level 2: Application and analysisLevel 3: Synthesis and evaluation

Very broadly, these intellectual levelsrelate to the three cognitive levels atwhich the Applied Knowledge,the Applied Skills and the StrategicProfessional exams are assessed.

Each subject area in the detailed studyguide included in this document is givena 1, 2, or 3 superscript, denotingintellectual level, marked at the end ofeach relevant line. This gives anindication of the intellectual depth atwhich an area could be assessed withinthe examination. However, while level 1broadly equates with AppliedKnowledge , level 2 equates to AppliedSkills and level 3 to StrategicProfessional, some lower level skills cancontinue to be assessed as the studentprogresses through each level. Thisreflects that at each stage of study therewill be a requirement to broaden, as wellas deepen capabilities. It is alsopossible that occasionally some higher

level capabilities may be assessed atlower levels.

Learning Hours andEducation Recognition

The ACCA qualification does notprescribe or recommend any particularnumber of learning hours forexaminations because study andlearning patterns and styles vary greatlybetween people and organisations. Thisalso recognises the wide diversity ofpersonal, professional and educationalcircumstances in which ACCA studentsfind themselves.

As a member of the InternationalFederation of Accountants, ACCA seeksto enhance the education recognition ofits qualification on both national andinternational education frameworks, andwith educational authorities and partnersglobally. In doing so, ACCA aims toensure that its qualifications arerecognised and valued by governments,regulatory authorities and employersacross all sectors. To this end, ACCAqualifications are currently recognisedon the education frameworks in severalcountries. Please refer to your nationaleducation framework regulator forfurther information.

Each syllabus contains between 20 and35 main subject area headingsdepending on the nature of the subjectand how these areas have been brokendown.

Advanced Taxation


Guide to Exam Structure

The structure of examinations varieswithin and between levels.

The Applied Knowledge examinationscontain 100% compulsory questions toencourage candidates to study acrossthe breadth of each syllabus.

The Applied Knowledge exams areassessed by equivalent two-hourcomputer based and paper basedexaminations.

The Corporate and Business Law examis a two- hour computer based objectivetest examination also available as apaper based version.

The other Applied Skills examinations,contain a mix of objective and longertype questions with a duration of threehours for 100 marks.* These areavailable as computer-based and paper-based exams. In the computer-basedexams there may be instances wherewe have extra content for the purposesof ongoing quality assurance andsecurity.

*For paper-based exams there is anextra 15 minutes to reflect the manualeffort required.

Strategic Business Leader is ACCA’scase study examination at the StrategicProfessional level and is examined as aclosed book exam of four hours,including reading planning and reflectiontime which can be used flexibly withinthe examination. There is no pre-seeninformation and all exam relatedmaterial, including case information andexhibits are available within theexamination. Strategic Business Leaderis an exam based on one main businessscenario which involves candidatescompleting several tasks within which

additional material may be introduced.All questions are compulsory and eachexamination will contain a total of 80technical marks and 20 ProfessionalSkills marks. The detail of the structureof this exam is described in the StrategicBusiness Leader syllabus and studyguide document.

The other Strategic Professional examsare all of three hours and 15 minutesduration. All contain twoSections and all questions arecompulsory. These exams all containfour professional marks. The detail ofthe structure of each of these exams isdescribed in the individual syllabusdocuments.

ACCA encourages students to take timeto read questions carefully and to plananswers but once the exam time hasstarted, there are no additionalrestrictions as to when candidates maystart writing in their answer books.

Time should be taken to ensure that allthe information and exam requirementsare properly read and understood.

The pass mark for all ACCAQualification examinations is 50%.

Advanced Taxation


Guide to ExaminationAssessment

ACCA reserves the right to examineanything contained within the studyguide at any examination session. Thisincludes knowledge, techniques,principles, theories, and concepts asspecified. For the financial accounting,audit and assurance, law and tax examsexcept where indicated otherwise,ACCA will publish examinabledocuments once a year to indicateexactly what regulations and legislationcould potentially be assessed withinidentified examination sessions.

For most examinations (not tax),regulation issued or legislation passedon or before 1 September annually, willbe examinable from 1 September of thefollowing year to 31 August of the yearafter that. Please refer to theexaminable documents for the exam(where relevant) for further information.

Regulation issued or legislation passedin accordance with the above dates maybe examinable even if the effective dateis in the future.

The term issued or passed relates towhen regulation or legislation has beenformally approved.

The term effective relates to whenregulation or legislation must be appliedto an entity transactions and businesspractices.

The study guide offers more detailedguidance on the depth and level atwhich the examinable documents will beexamined. The study guide shouldtherefore be read in conjunction with theexaminable documents list.

For UK tax exams, examinations fallingwithin the year 1 April to 31 March willgenerally examine the Finance Actwhich was passed in the previous year.Therefore, exams falling in the year 1April 2018 to 31 March 2019 willexamine the Finance Act 2017 and anyexaminable legislation which is passedoutside of the Finance Act before 31July 2017.

None of the current or impendingdevolved taxes for Scotland, Wales, andNorthern Ireland is, or will be,examinable.

Advanced Taxation


Syllabus

This syllabus and study guide is designed to help with planning study and to providedetailed information on what could be assessed in any examination session.

Syllabus

Aim

To apply relevant knowledge and skillsand exercise professional judgement inproviding relevant information andadvice to individuals and businesses onthe impact of the major taxes onfinancial decisions and situations.

Relational diagram

This diagram shows direct and indirectlinks between this exam and otherexams preceding or following it. Someexams are directly underpinned by otherexams such as Advanced PerformanceManagement by PerformanceManagement. These links are shown as solid line arrows. Other exams only haveindirect relationships with each other such as links existing between the accountingand auditing exams. The links between these are shown as dotted line arrows. Thisdiagram indicates where you are expected to have underpinning knowledge andwhere it would be useful to review previous learning before undertaking study.

AdvancedTaxation

Taxation

Advanced Taxation


Main capabilities

On successful completion of this exam, candidates should be able to:

A Apply further knowledge and understanding of the UK tax system through thestudy of more advanced topics within the taxes studied previously and the studyof stamp taxes

B Identify and evaluate the impact of relevant taxes on various situations andcourses of action, including the interaction of taxes

C Provide advice on minimising and/or deferring tax liabilities by the use ofstandard tax planning measures

D Communicate with clients, HM Revenue and Customs and other professionals inan appropriate manner.

This diagram illustrates the flows and links between the main capabilities (sections)of the syllabus and should be used as an aid to planning teaching and learning in astructured way.

Advanced Taxation


Rationale

The Advanced Taxation syllabus furtherdevelops the key aspects of taxationintroduced in the compulsory Taxationsyllabus within the Skills module andextends the candidates’ knowledge ofthe tax system, together with their abilityto apply that knowledge to the issuescommonly encountered by individualsand businesses, such that successfulcandidates should have the ability tointerpret and analyse the informationprovided and communicate theoutcomes in a manner appropriate to theintended audience.

The syllabus builds on the basicknowledge of core taxes from the earliertaxation paper and introducescandidates to stamp taxes. As this is anoptional paper, aimed at thoserequiring/desiring more than basic taxknowledge for their future professionallives, the syllabus also extends theknowledge of income tax, corporationtax, capital gains tax and inheritance taxto encompass, further overseas aspectsof taxation, the taxation of trusts andadditional exemptions and reliefs.

Computations will normally only berequired in support of explanations oradvice and not in isolation.

Candidates are not expected toconcentrate on the computational

aspects of taxation. Instead this paperseeks to develop candidates’ skills ofanalysis, interpretation andcommunication. Candidates areexpected to be able to use establishedtax planning methods and considercurrent issues in taxation.

Advanced Taxation


Detailed syllabus andexam format

A Knowledge and understanding ofthe UK tax system through thestudy of more advanced topicswithin the taxes studiedpreviously and the study of stamptaxes.

1. Income and income tax liabilities insituations involving further overseasaspects and in relation to trusts, andthe application of additionalexemptions and reliefs.

2. Chargeable gains and capital gainstax liabilities in situations involvingfurther overseas aspects and inrelation to closely related personsand trusts, and the application ofadditional exemptions and reliefs.

3. Inheritance tax in situations involvingfurther aspects of the scope of thetax and the calculation of theliabilities arising, the principles ofvaluation and the reliefs available,transfers of property to and fromtrusts, overseas aspects and furtheraspects of administration.

4. Corporation tax liabilities insituations involving overseas andfurther group aspects and in relationto special types of company, and theapplication of additional exemptionsand reliefs.

5. Stamp taxes

6. Value added tax, tax administrationand the UK tax system

B The impact of relevant taxes onvarious situations and courses ofaction, including the interaction oftaxes

1. Taxes applicable to a given situationor course of action and their impact.

2. Alternative ways of achievingpersonal or business outcomes maylead to different tax consequences.

3. Taxation effects of the financialdecisions made by businesses(corporate and unincorporated) andby individuals.

4. Tax advantages and/ordisadvantages of alternativecourses of action.

5. Statutory obligations imposed in agiven situation, including any timelimits for action and the implicationsof non-compliance.

C Minimising and/or deferring taxliabilities by the use of standardtax planning measures

1. Types of investment and otherexpenditure that will result in areduction in tax liabilities for anindividual and/or a business.

2. Legitimate tax planning measures,by which the tax liabilities arisingfrom a particular situation or courseof action can be mitigated.

3. The appropriateness of suchinvestment, expenditure ormeasures, given a particulartaxpayer’s circumstances or statedobjectives.

4. The mitigation of tax in the mannerrecommended, by reference tonumerical analysis and/or reasonedargument.

Advanced Taxation


5. Ethical and professional issuesarising from the giving of taxplanning advice.

6. Current issues in taxation.

D Communicating with clients, HMRevenue and Customs and otherprofessionals

1. Communication of advice,recommendations and information inthe required format.

2. Presentation of written information,in language appropriate to thepurpose of the communication andthe intended recipient.

3. Conclusions reached with relevantsupporting computations.

4. Assumptions made or limitations inthe analysis provided, together withany inadequacies in the informationavailable and/or additionalinformation required to provide afuller analysis.

5. Other non-tax factors that should beconsidered.

Advanced Taxation


Approach to examining the syllabus

The Advanced Taxation exam builds upon the skills and knowledge examined in theTaxation exam. At this stage candidates will be expected to demonstrate anintegrated knowledge of the subject and an ability to relate their technicalunderstanding of the subject. The study guide specifies the wide range of contextualunderstanding that is required to achieve a satisfactory standard at this level.

Examination Structure

The syllabus is assessed by a three-hour 15 minutes examination

Section A

Section A consists of two compulsory case-study questions. Question 1 has 35marks and question 2 has 25 marks. There will also be five ethics marks and fourprofessional skills marks available in this section.

Section B

Section B consists of two compulsory 20-mark questions, covering both businessand personal tax issues.

Candidates will be expected to undertake both calculation and narrative work. Thequestions will be scenario-based and may involve consideration of more than onetax, some elements of planning and the interaction of taxes.

Tax rates, allowances and information on certain reliefs will be given in theexamination.

Total 100 marks

Advanced Taxation


Study Guide

A. Apply further knowledgeand understanding of theuk tax system through thestudy of more advancedtopics within the taxesstudied previously and thestudy of stamp taxes

1. Income and income tax liabilitiesin situations involving furtheroverseas aspects and in relationto trusts, and the application ofexemptions and reliefs

a) The contents of the Paper F6 studyguide for income tax and nationalinsurance, under headings: [2]

B1 The scope of income tax

B2 Income from employment

B3 Income from self-employment

B4 Property and investmentincome

B5 The comprehensivecomputation of taxable incomeand the income tax liability

B6 National insurancecontributions for employed andself-employed persons

B7 The use of exemptions andreliefs in deferring andminimising income tax liabilities

The following additional material is alsoexaminable:

b) The scope of income tax: [3]

i) Explain and apply the conceptsof residence and domicile and

advise on the relevance toincome tax

ii) Advise on the availability of theremittance basis to UK residentindividuals [2]

iii) Advise on the tax position ofindividuals coming to and leavingthe UK

iv) Determine the income taxtreatment of overseas income

v) Understand the relevance of theOECD model double tax treaty togiven situations

vi) Calculate and advise on thedouble taxation relief availableto individuals

c) Income from employment: [3]

i) Advise on the tax treatment ofshare option and share incentiveschemes, including employeeshareholder shares

ii) Advise on the tax treatment oflump sum receipts

iii) Advise on the overseas aspectsof income from employment,including travelling andsubsistence expenses

iv) Identify personal servicecompanies and advise on the taxconsequences of providingservices via a personal servicecompany

d) Income from self employment: [3]

i) Advise on a change ofaccounting date

ii) Advise on the relief available fortrading losses following thetransfer of a business to acompany

iii) Recognise the tax treatment ofoverseas travelling expenses

Advanced Taxation


iv) Advise on the allocation of theannual investment allowancebetween related businesses

v) Identify the enhanced capitalallowances available in respectof expenditure on greentechnologies.[2]

e) Property and investment income: [3]

i) Advise on the tax implications ofjointly held assets

ii) Recognise the tax treatment ofsavings income paid net of tax

iii) Income from trusts andsettlements: Understand theincome tax position of trustbeneficiaries

f) The comprehensive computation oftaxable income and the income taxliability:[3]

i) Understand the allocation of thepersonal allowance to differentcategories of income.

ii) Advise on the income taxposition of the income of minorchildren

g) The use of exemptions and reliefs indeferring and minimising income taxliabilities:

i) Understand and apply the rulesrelating to investments in theseed enterprise investmentscheme and the enterpriseinvestment scheme [3]

ii) Understand and apply the rulesrelating to investments inventure capital trusts [3]

Excluded topics

The scope of income tax:

Details of specific anti-avoidance provisions, exceptas stated in the study guide.

Profits of non-residents froma trade of dealing in ordeveloping land in the UK.

Income from employment:

Explanation of the PAYEsystem.

The calculation of a carbenefit where emissionfigures are not available.

Income from self employment:

The 100% first yearallowance for renovatingbusiness premises indisadvantaged areas andflats above shops.

Capital allowances foragricultural buildings,patents, scientific researchand know how.

Enterprise zones.

The allocation of notionalprofits and losses for apartnership.

Farmers averaging of profits.

The averaging of profits forauthors and creative artists.

Details of specific anti-avoidance provisions, exceptas stated in the study guide.

Investment income of apartnership

Property and investment income:

The deduction forexpenditure by landlords onenergy-saving items

Pre-owned assets

Advanced Taxation


National insurance:

The calculation of directors’national insurance on amonth by month basis.

The offset of trading lossesagainst non-trading incomeand capital gains.

Income from trusts and settlements:

The computation of incometax payable by trustees.

Overseas aspects.

The comprehensive computation oftaxable income and the income taxliability:

The blind person’s allowanceand the married couple’s ageallowance.

Tax credits.

Maintenance payments.

Charitable donations.

Social security benefits apartfrom the State RetirementPension.

The £10,000 anti-avoidanceannual allowance applicableto taxpayers accessing theirpension flexibly

The use of exemptions and reliefs indeferring and minimising income taxliabilities:

The conditions that need to besatisfied for pension schemes tobe registered by HM Revenueand Customs.

The transfer of pension benefitson death

2. Chargeable gains and capitalgains tax liabilities in situationsinvolving further overseasaspects and in relation to closelyrelated persons and truststogether with the application ofadditional exemptions and reliefs

a) The contents of the Paper F6study guide for chargeable gainsfor individuals under headings:[2]

C1 The scope of the taxationof capital gains

C2 The basic principles ofcomputing gains and losses

C3 Gains and losses on thedisposal of movable andimmovable property

C4 Gains and losses on thedisposal of shares andsecurities

C5 The computation ofcapital gains tax

C6 The use of exemptionsand reliefs in deferring andminimising tax liabilitiesarising on the disposal ofcapital assets


b) The scope of the taxation of capitalgains: [3]

i) Determine the tax implications ofindependent taxation andtransfers between spouses

ii) Identify the concepts ofresidence and domicile anddetermine their relevance tocapital gains tax

iii) Advise on the availability of theremittance basis to non-UKdomiciled individuals.[2]

Advanced Taxation


iv) Determine the UK taxation offoreign gains, includingdouble taxation relief

v) Conclude on the capital gains taxposition of individuals coming toand leaving the UK

vi) Advise on the UK taxation ofgains on the disposal of UKresidential property owned bynon-residents

vii) Identify the occasions when acapital gain would arise on apartner in a partnership on thedisposal of a partnership asset

c) Capital gains tax and trusts:

i) Advise on the capital gains taximplications of transfers ofproperty into trust. [3]

ii) Advise on the capital gains taximplications of property passingabsolutely from a trust to abeneficiary.[2]

d) The basic principles of computinggains and losses: [3]

i) Identify connected persons forcapital gains tax purposes andadvise on the tax implications oftransfers between connectedpersons

ii) Advise on the impact of dates ofdisposal and conditionalcontracts

iii) Evaluate the use of capital lossesin the year of death

e) Gains and losses on the disposal ofmovable and immovable property: [3]

i) Advise on the tax implications ofa part disposal, including smallpart disposals of land

ii) Determine the gain on thedisposal of leases andwasting assets

iii) Establish the tax effect of capitalsums received in respect of theloss, damage or destruction ofan asset

iv) Advise on the tax effect ofmaking negligible valueclaims

v) Determine when capital gains taxcan be paid by instalments andevaluate when this would beadvantageous to taxpayers

f) Gains and losses on the disposal ofshares and securities: [3]

i) Extend the explanation of thetreatment of rights issues toinclude the small part disposalrules applicable to rights issues

ii) Define a qualifying corporatebond (QCB), and understandwhat makes a corporate bondnon-qualifying. Understand thecapital gains tax implications ofthe disposal of QCBs inexchange for cash or shares

iii) Apply the rules relating toreorganisations, reconstructionsand amalgamations andadvise on the most tax efficientoptions available in givencircumstances

iv) Establish the relief for capitallosses on shares in unquotedtrading companies [3]

g) The use of exemptions and reliefs indeferring and minimising taxliabilities arising on the disposal ofcapital assets: [3]

Advanced Taxation


i) Understand and apply enterpriseinvestment scheme reinvestmentrelief

ii) Understand and apply seedenterprise investment schemereinvestment relief

iii) Advise on the availability ofentrepreneurs’ relief in relation toassociated disposals

iv) Understand and apply the reliefthat is available on the transfer ofan unincorporated business to alimited company

v) Understand the capital gains taximplications of the variation ofwills

Excluded topics

The scope of the taxation of capitalgains:

Detailed knowledge of thestatements of practice onpartnership capital gains.

Deemed disposals on achange in the profit sharingratio (PSR) of a partnership

Capital gains tax and trusts:

Overseas aspects of capitalgains tax and trusts.

The computation of capitalgains tax payable bytrustees.

Transfers of property to orfrom trustees prior to 22March 2006.

Knowledge of situationswhere property is transferredbetween trusts or where theterms or nature of the trust isaltered.

Knowledge of situationswhere property within a trustwith an immediate post-deathinterest passes to the spouseor civil partner of the settloron the death of the lifetenant.

Knowledge of the specialrules concerning trusts forthe disabled, trusts forbereaved minors, transitionalserial interest trusts and age18 to 25 trusts.

The basic principles of computinggains and losses:

Assets held at 31 March1982.

Relief for losses on loansmade to traders.

Gains and losses on the disposal ofmovable and immovable property:

The detailed calculations forchattels where the cost orproceeds are less than£6,000, other thanknowledge of the exemptionwhere both cost andproceeds are less than£6,000.

Sets of chattels in relation tothe chattels exemption.

The grant of a lease or sub-lease out of either a freehold,long lease or short lease.

Appropriations to and fromtrading stock (inventory).

Mixed use property

Gains and losses on the disposal ofshares and securities:

Advanced Taxation


Computation of cost andindexed cost within the s.104TCGA 1992 share pool

3. Inheritance tax in situationsinvolving further aspects of thescope of the tax and thecalculation of the liabilitiesarising, the principles of valuationand the reliefs available, transfersof property to and from trusts,overseas aspects and furtheraspects of administration

a) The contents of the Paper F6 studyguide for inheritance tax underheadings:[2]

D1 The basic principles ofcomputing transfers of value

D2 The liabilities arising onthe chargeable lifetimetransfers and on the death ofan individual

D3 The use of exemptions indeferring and minimisinginheritance tax liabilities

D4 Payment of inheritancetax

The following additional material is also

examinable:

b) The scope of inheritance tax:

i) Explain the concepts of domicileand deemed domicile andunderstand the application ofthese concepts to inheritancetax [2]

ii) Identify excluded property [2]

iii) Identify and advise on the taximplications of the location ofassets [3]

iv) Identify and advise on gifts withreservation of benefit [3]

v) Identify and advise on the taximplications of associatedoperations [2]

c) The basic principles of computingtransfers of value:

i) Advise on the principles ofvaluation[3]

ii) Advise on the availability ofbusiness property relief andagricultural property relief.[3]

iii) Identify exempt transfers.[2]

d) The liabilities arising on chargeablelifetime transfers and on the death ofan individual: [3]

i) Advise on the tax implications ofchargeable lifetime transfers

ii) Advise on the tax implications oftransfers within sevenyears of death

iii) Advise on the tax liability arisingon a death estate

iv) Advise on the relief for the fall invalue of lifetime gifts

v) Advise on the operation of quicksuccession relief

vi) Advise on the operation ofdouble tax relief for inheritancetax

vii) Advise on the inheritance taxeffects and advantages of thevariation of wills

e) The liabilities arising in respect oftransfers to and from trusts and onproperty within

trusts:

i) Define a trust [2]

Advanced Taxation


ii) Distinguish between differenttypes of trust [3]

iii) Advise on the inheritance taximplications of transfers ofproperty into trust [3]

iv) Advise on the inheritance taximplications of property passingabsolutely from a trust to abeneficiary [2]

v) Identify the occasions on whichinheritance tax is payable bytrustees [3]

f) The use of exemptions and reliefs indeferring and minimising inheritancetax liabilities: [3]

i) Advise on the use of reliefs andexemptions to minimiseinheritance tax liabilities, asmentioned in the sections above

g) The system by which inheritance taxis administered, including theinstalment option for the payment oftax:

i) Identify the occasions on whichinheritance tax may be paid byinstalments.[2]

ii) Advise on the due dates, interestand penalties for inheritance taxpurposes.[3]

Excluded topics

The scope of inheritance tax:

Pre 18 March 1986 lifetimetransfers.

Transfers of value by closecompanies.

The liabilities arising on chargeablelifetime transfers and on the death ofan individual:

Double grossing up on death.

Post mortem reliefs.

Relief on relevant businessproperty and agricultural propertygiven as exempt legacies.

Detailed knowledge of thedouble charges legislation.

Computing transfers of value:

Valuation of an annuity or aninterest in possession where thetrust interest is subject to anannuity.

Woodlands relief.

Conditional exemption forheritage property.

Inheritance tax and trusts:

IHT aspects of discretionarytrusts prior to 27 March 1974.

Trusts created prior to 22 March2006.

Computation of ten year chargesand exit charges.

The computation of inheritancetax payable by trustees of animmediate post-death interesttrust.

Overseas aspects of inheritancetax and trusts.

The conditions that had to besatisfied for a trust to be anaccumulation and maintenancetrust.

Knowledge of situations whereproperty is transferred betweentrusts or where the terms ornature of the trust is altered.

Knowledge of situations whereproperty within a trust with animmediate post-death interestpasses to the spouse or civil

Advanced Taxation


partner of the settlor on thedeath of the life tenant.

Knowledge of the special rulesconcerning trusts for thedisabled, trusts for bereavedminors, transitional serial interesttrusts and age 18 to 25 trusts.

4. The Corporation tax liabilities insituations involving furtheroverseas and group aspects andin relation to special types ofcompany, and the application ofadditional exemptions and reliefs

a) The contents of the Paper F6 studyguide, for corporation tax, underheadings:[2]

E1 The scope of corporation tax

E2 Taxable total profits

E3 Chargeable gains forcompanies

E4 The comprehensivecomputation of the corporationtax liability

E5 The effect of a groupcorporate structure forcorporation tax purposes

E6 The use of exemptions andreliefs in deferring andminimising corporation taxliabilities


b) The scope of corporation tax: [3]

i) Identify and calculate corporationtax for companies withinvestment business.

ii) Close companies:

Apply the definition of aclose company to givensituations

Conclude on the taximplications of acompany being a closecompany or a closeinvestment holdingcompany

iii) Identify and evaluate thesignificance of accountingperiods on administration orwinding up

iv) Conclude on the tax treatment ofreturns to shareholders afterwinding up has commenced

v) Advise on the tax implications ofa purchase by a company of itsown shares

vi) Identify personal servicecompanies andadvise on the tax consequencesof services being provided via apersonal service company

c) Taxable total profits: [3]

i) Identify qualifying research anddevelopment expenditure, bothcapital and revenue, anddetermine the reliefs available byreference to the size of theindividual company/group

ii) Recognise the relevance of acompany generating profitsattributable to patents

iii) Identify the enhanced capitalallowances available in respectof expenditure on greentechnologies, including the taxcredit available in the case of aloss making company

iv) Determine the tax treatment ofnon trading deficits on loanrelationships

Advanced Taxation


v) Recognise the alternative taxtreatments of intangible assetsand conclude on the besttreatment for a given company

vi) Advise on the impact of thetransfer pricing and thincapitalisation rules oncompanies

vii) Advise on the restriction on theuse of losses on a change inownership of a company

d) The comprehensive calculation ofthe corporation tax liability: [3]

i) Assess the impact of the OECDmodel double tax treaty oncorporation tax

ii) Evaluate the meaning andimplications of a permanentestablishment

iii) Identify and advise on the taximplications of controlledforeign companies

iv) Advise on the tax position ofoverseas companies trading inthe UK

v) Calculate double taxation relief

e) The effect of a group structure forcorporation tax purposes: [3]

i) Advise on the allocation of theannual investment allowancebetween group or relatedcompanies

ii) Advise on the tax consequencesof a transfer of intangibleassets

iii) Advise on the tax consequencesof a transfer of a trade andassets where there is commoncontrol

iv) Understand the meaning ofconsortium owned company andconsortium member [2]

v) Advise on the operation ofconsortium relief

vi) Determine pre-entry losses andunderstand their tax treatment

vii) Determine the degroupingcharge where a company leavesa group within six years ofreceiving an asset by way of ano gain/no loss transfer

viii) Determine the effects of the anti-avoidance provisions, wherearrangements exist for acompany to leave a group

ix) Advise on the tax treatment of anoverseas branch

x) Advise on the relief for tradinglosses incurred by an overseassubsidiary

f) The use of exemptions and reliefs indeferring and minimising corporationtax liabilities: [3]

i) Advise on the availability, andthe application ofdisincorporation relief

ii) Determine the application of thesubstantial shareholdingsexemption

Excluded topics

The scope of corporation tax:

Details of specific anti-avoidance provisions, exceptas stated in the Study Guide.

Profits of non-residents froma trade of dealing in ordeveloping land in the UK.

Taxable total profits:

Advanced Taxation


The disposal of residentialproperty by a company

Tax avoidance involvingcarry forward losses

Diverted profits tax

The comprehensive calculation ofthe corporation tax liability:

Corporation tax rates forcompanies in the process ofwinding up.

Relief for overseas tax as anexpense.

Detailed knowledge ofspecific double taxationagreements.

Migration of a UK residentcompany.

Mixer companies.

Detailed computationalquestions on the carry backand carry forward ofunrelieved foreign tax.

Quarterly accounting forincome tax.

5. Stamp taxes (stamp duty, stampduty reserve tax, and stamp dutyland tax)

a) The scope of stamp taxes: [3]

i) Identify the property in respect ofwhich stamp taxes arepayable.

b) Identify and advise on the liabilitiesarising on transfers. [3]

i) Advise on the stamp taxespayable on transfers of sharesand securities

ii) Advise on the stamp taxespayable on transfers of land

c) The use of exemptions and reliefs indeferring and minimising stamptaxes: [3]

i) Identify transfers involving noconsideration

ii) Advise on group transactions

d) Understand and explain the systemsby which stamp taxes areadministered.[2]

Excluded topics

The scope of stamp taxes:

Leases

Land and BuildingsTransaction Tax (LBTT)

The liabilities arising on transfers:

The contingency principle.

Residential property held bynon-natural persons.

The systems by which stamp taxesare administered:

Detailed rules on interest andpenalties.

6. Value added tax, taxadministration and the UK taxsystem:

a) The contents of the Paper F6 studyguide for value added tax (VAT)under headings:

F1 The VAT registrationrequirements:

F2 The computation of VATliabilities:

Advanced Taxation


F3 The effect of specialschemes

The following additional materialis also examinable:

i) Advise on the VAT implicationsof the supply of land andbuildings in the UK

ii) Advise on the VAT implicationsof partial exemption

iii) Advise on the application of thecapital goods scheme

b) The contents of the Paper F6 studyguide for the UK tax system and itsadministration under headings:

A1 The overall function andpurpose of taxation in amodern economy

A2 Principal sources ofrevenue law and practice

A3 The systems for selfassessment and the makingof returns

A4 The time limits for thesubmission of information,claims and payment of tax,including payments onaccount

A5 The procedures relatingto compliance checks,appeals and disputes

A6 Penalties for non-compliance

i) Advise on the increasedpenalties which apply in relationto offshore matters. [2]

Excluded topics

Value added tax:

The determination of the taxpoint.

The contents of a valid VATinvoice.

Do it yourself builders.

Second hand goods scheme.

Retailers’ schemes.

Schemes for farmers.

Special place of supply rules forbusiness to consumer suppliesof telecommunications,broadcasting and e-services.

Disaggregation of businessactivities for VAT purposes.

Divisional registration.

B. The impact of relevanttaxes on varioussituations and courses ofaction, including theinteraction of taxes

1. Identify and advise on the taxesapplicable to a given course ofaction and their impact.[3]

2. Identify and understand that thealternative ways of achievingpersonal or business outcomesmay lead to different taxconsequences

a) Calculate the receipts from atransaction, net of tax and comparethe results of alternative scenariosand advise on the most tax efficientcourse of action.[3]

3. Advise how taxation can affectthe financial decisions made bybusinesses (corporate and

Advanced Taxation


unincorporated) and byindividuals

a) Discuss Understand and compareand contrast the tax treatment of thesources of finance and investmentproducts available to individuals.[3]

b) Understand and explain the taximplications of the raising of equityand loan finance.[3]

c) Explain the tax differences betweendecisions to lease, use hirepurchase or purchase outright.[3]

d) Understand and explain the impactof taxation on the cash flows of abusiness.[3]

4 Assess the tax advantages anddisadvantages of alternative

courses of action.[3]

5. Understand the statutoryobligations imposed in a givensituation, including any timelimits for action and advise on theimplications of non-compliance.[3]

C. Minimise and/or defer taxliabilities by the use ofstandard tax planningmeasures

1. Identify and advise on the typesof investment and otherexpenditure that will result in areduction in tax liabilities for anindividual and/or a business.[3]

2. Advise on legitimate tax planningmeasures, by which the taxliabilities arising from a particularsituation or course of action canbe mitigated.[3]

3. Advise on the appropriateness ofsuch investment, expenditure ormeasures given a particulartaxpayer’s circumstances orstated objectives.[3]

4. Advise on the mitigation of tax inthe manner recommended byreference to numerical analysisand/or reasoned argument.[3]

5. Be aware of the ethical andprofessional issues arising fromthe giving of tax planningadvice.[3]

6. Be aware of and give advice oncurrent issues in taxation.[3]

D. Communicate with clients,hm revenue and customsand other professionals inan appropriate manner

1. Communicate advice,recommendations andinformation in the requiredformat:[3]

For example the use of:

• Reports

• Letters

• Memoranda

• Meeting notes

2. Present written information, inlanguage appropriate to thepurpose of the communicationand the intended recipient.[3]

3. Communicate conclusionsreached, together, wherenecessary with relevantsupporting computations.[3]

Advanced Taxation


4. State and explain assumptionsmade or limitations in the analysisprovided; together with anyinadequacies in the informationavailable and/or additionalinformation required to provide afuller analysis.[3]

5. Identify and explain other, non-tax, factors that should beconsidered.[3]

Advanced Taxation


Documents

Advanced Taxation S18 - ACCA Qualificationfuture.accaglobal.com/assets/documents/advanced-taxation-september...June 2018 to March 2019 Advanced Taxation Syllabus and Study Guide