Assistance for ATX-UK

@Mkholo39 said:
I’m preparing for ATX-UK for September 2020. I am using BBP Textbook together with their exam kit. I can follow or understand the concepts when studying but when it comes to attempting the questions, i find my answers very shallow or else not understanding what the questions are really requiring. How to overcome this predicament?

Hi friend,

Regarding your post, first, you need to understand what has changed between TX and ATX in terms of questions. The syllabus is more or less the same with a few things added here and there but its the question style that mostly changes. In TX, the question would give you all the information and it would ask you to calculate the tax.

In ATX, you will notice that the questions follow an advisory pattern mostly, rather than just calculating the numbers.

Understand that in ATX, the answer is usually to calculate and EXPLAIN each way, and sometimes which one might be more beneficial. For example, a taxpayer goes back and forth between the UK and another country, and he made some capital disposals during his time abroad. He has been UK resident for 5 out of the 7 tax years immediately preceding the tax year of departure, he is non-UK resident for 2 years and he is coming back to the UK soon or in 4 years (he hasn’t made up his mind yet).

The question in the exam can be something like this: advise on the capital gains tax implications of this sale.

In the question, you need to understand that he has been UK resident for 5 out of the 7 tax years immediately preceding the tax year of departure and he is non-UK resident for 2 years, so if he sells now, he will be treated as a temporary non-UK resident and if there is a gain on that sale, it will be subject to UK CGT even though the transaction might have taken place abroad. So when he comes back to the UK, he will be charged with CGT on that gain.

You will need to explain both scenarios; one when he comes back now and the gain is subject to CGT as he will be treated as a temporary non-UK resident, and one when he comes back in 4 years (if he comes back in 4 years, he will not be treated as a temporary non-UK resident as the limit is 5 years abroad or less (2 years already abroad + 4 more = 6 years abroad in total), thus no CGT). If the question also asks you to advise on the most beneficial option, you need to tell that client to come back in 4 years to avoid that gain being taxed.

As you can see, there would have been a very small calculation element in that question and you would have to mostly explain why you did it like this, based on what rules etc. I hope this helps.

Good luck!