ACCA F6 Taxation (UK)

Free online ACCA study materials and support for ACCA F6 Paper


ACCA Paper F6 – Key to success

Nature of the ACCA F6 paper

The syllabus for ACCA F6 Paper, Taxation, introduces candidates to the subject of taxation and provides the core knowledge of the underlying principles and major technical areas of taxation as they affect the activities of individuals and businesses.
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ACCA course notes

Free ACCA F6 course notes June 2014 exams

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December 2013 ACCA Exam tips for Paper F6

Students should never rely on 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(s) 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 sat or even 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!

Be properly prepared through work effort, expect the worst but know if you do your best you will pass whatever exam is placed in front of you!!

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 examiner’s article.

 

Q.1 Income Tax / VAT

This question always requires the preparation of an Income Tax Computation for at least one individual, possibly two (spouses or civil partners) or even three taxpayers (members of the same family) The two main sources of income tested within the computation are Employment Income and the adjusted trading profits of the Self Employed. Property income is a popular exam area and the recent changes in the definition of furnished holiday lettings may be tested here. Interest income is also frequently tested with examples of taxable interest received net and gross plus exempt interest and of course some dividend income.

A scenario involving a transition from employment to self employment part way through the tax year would allow both employment income with assessable benefits for part of tax year to be tested along with adjustment of profits and a capital allowances computation for a short or long opening period of account and dealing with pre trading revenue and capital expenditure. The adjusted profit would then be used to determine the assessments in the opening years of the new business and the computation of the overlap profits

Class I NIC’s for the period of employment and or Class 2 and 4 NIC’s for the period of self employment could also be tested.

If VAT was included in such a question then it could test issues of VAT registration, submission of first VAT return dealing with pre registration input VAT and suitability of small business accounting schemes such as cash and annual accounting and the flat rate scheme.

Q.2 Corporation Tax / VAT

Will require the preparation of a Corporation Tax Computation for a Chargeable Accounting Period which will probably straddle Financial Years 2011 and 2012 e.g. Accounting Year Ended 31 December 2012 or 9 months to 30 September 2012. The company may operate overseas through branch operations which have made profits and sustained losses and a question may ask whether the branch exemption election would have been worthwhile though not now possible in relation to either a previous or current accounting period.

A significant amount of marks are usually available for the adjustment of profit statement and Capital Allowances Computation if not also tested within Q.1, but as mentioned earlier a capital allowance computation would not be tested in an accounting period spanning 2 Financial Years where the allowance rates have changed. The company may be in a gains group and group relief group. .

Q.3 Chargeable Gains

If a question involves corporate gains rather than an individual then the main assets that a company may dispose of would include:

Properties – this may involve establishing the cost of the property from an earlier acquisition via a no gain no loss transfer from a fellow gains group member and/or the cost may have been reduced by a rollover relief claim at the time of acquisition. The gain arising may now also be deferred by a full rollover or partial rollover relief claim or if a depreciating asset is now acquired a holdover relief claim may instead be available.

Land – a part disposal of land

Shares

Chattels – e.g. a painting from the boardroom

If a share disposal by an individual takes place then this could be in the form of a takeover, or the sale of shares that had been acquired as a result of an earlier takeover.

 Questions 4 and 5

IHT seems likely to be a regular feature of part of a question and it would seem likely that at some point the examiner will test the more difficult problem of CLT’s not only taking place within the 7 years before the date of death but there also being a CLT more than 7 years before death. This would not itself be chargeable on death but given the cumulative nature of IHT would impact on the transfers within the 7 years following it which do then become chargeable on death.

 

Groups if not tested in Q.2

Income tax loss reliefs and / or partnerships

A question involving the provision of cars to employees and to an unincorporated trader as per note (3) above.


Exam Technique for ACCA Paper F6 “Taxation” (UK)

Practise as many exam standard questions as you can.
Make sure you do to time. After the 15 minute reading time you have 1.8 minutes per mark. If a question is split between part (a) 10 marks and part (b) 10 marks then only spend 18 minutes on part (a) and then move on to part (b).
Look at all the requirements of the question, can you answer an easy parts first, for example one part maybe standalone and on something very straightforward, so do this part first
You do not have to answer the questions in the order they are set, if question 5 is the easiest do this one first
Question 3 will be the hardest so leave this until last but make sure you leave 36 minutes to answer it.
Do not panic if you can’t remember something in a question, don’t spend too much time trying to remember it, have a go or even guess. Then you can move on to other parts of the question.
Above all you need 50% to pass, so find the marks you can do. There will always be more than 50% of the question which is examining core areas of the syllabus, only a few marks will be fringe areas, but you do not have to worry about these as you can find the 50 marks you need to pass.


Examiners Recommended Reading

A Horner and R Burrows, Tolley Tax Guide, Tolley Publishing

A Melville, Taxation: Finance Act 2007, Prentice Hall,

These books are recommended by the examiner . If you are having problems with a particular paper, or if you want to do extra reading out of interest, then you might them useful.

The most efficient way of obtaining them is from Amazon in the UK.