To enable candidates to apply the legislation, and gain the detailed technical knowledge and professional skills to identify and resolve complex corporate tax issues.
As the name suggests, the paper focuses on advanced aspects of corporation tax. It is aimed at those working in the corporate tax departments of firms and businesses where they have regular exposure to international tax, groups and more complex issues affecting larger owner-managed businesses. Scenarios will typically be based around larger owner-managed businesses (which may be listed on AIM but still have owner managers involved) and smaller listed companies.
This paper is more technical than the CIOT’s Owner-Managed Businesses and Taxation of Major Corporates papers, and recognises that the candidates will have to deal with more themselves without the help of technical specialists.
Candidates will be required to use technical knowledge and professional judgement to identify, explain and evaluate alternative tax treatments and to determine the appropriate solutions to complex taxation issues, giving due consideration to the needs of clients. Candidates will need to consider the commercial context and impact of recommendations in making such judgements.
The paper is aimed at candidates who have had at least two or three years’ practical experience working in relevant areas of taxation, together with the appropriate level of private study and/ or tuition.
Method of assessment
The Advanced Corporation Tax paper will be examined by a traditional paper based assessment. The examination paper will be 3 hours 15 minutes long of which the first 15 minutes will be reading time with no writing permitted. This examination will contain questions requiring the use of communication, judgement and evaluation skills as well as an ability to understand and apply technical skills to scenarios which may affect the taxation of corporate entities.
The questions will be for 10, 15 or 20 marks, totalling 100 marks, and there will normally be five or six questions.
The only printed material that candidates may take into the exam hall is one copy of the legislation (see below). Candidates will be provided with tax tables.
The syllabus for this paper comprises of five elements:
- Income tax in relation to corporates and groups
- Capital gains tax in relation to corporates and groups
- Corporation tax
- Capital allowances
- Awareness of Stamp duty and Stamp Duty Land Tax.
The detailed syllabus grid for this paper can be found at: www.tax.org.uk/students-and-qualifications/cta-qualification/cta-prospectus-and-syllabus
At least 70% of the Advance Corporation Tax paper will comprise material highlighted in the detailed syllabus grid as “core”.
Whilst law is not specifically examined on this paper, questions may be set which require candidates to have a knowledge and understanding of relevant legal matters within the Law Computer Based Examination syllabus.
The following learning outcomes should be read in conjunction with the detailed syllabus grid for this paper.
Candidates should be able to analyse, evaluate and calculate the tax consequences of actions for corporates and groups in given scenarios. This will involve advising and assisting clients in adhering to the requirements of tax statutes and relevant regulations.
In the assessment candidates may be required to demonstrate:
1) Communication skills
- Communicate complex tax issues in a format appropriate to the recipient who may be an external client, a fellow professional, or an internal colleague.
- Prepare suitable advice to explain tax liabilities with supporting calculations.
- Recommend appropriate tax-planning advice.
- Identify further information required to complete tax computations and finalise tax advice.
- Give advice which is appropriate, technically correct and within the law. Whilst ethics is not specifically examined in this paper, candidates are expected to produce solutions which meet the ethical guidance of the CIOT.
- Interpret and communicate UK tax legislation and apply it to a scenario.
2) Technical skills
The detailed requirements are set out in grids and other documents referred to in the Syllabus section above. In summary, the key technical skills to be assessed on this paper are to be able to:
- Understand, explain and prepare UK corporation tax computations of corporates. This will include:
- a sound knowledge of adjustments that might feature in the UK corporation tax computations of companies and groups together with a working understanding of other areas in which clients will take advice. Even if they are not specialising in such areas, candidates will be expected to have a reasonable knowledge of them so that they could coordinate the work of the firm’s specialists when advising their clients.
- accounting standards in so far as they are relevant to tax and to understand the tax consequences of adopting alternative accounting treatments.
- the taxation of loan relationships and derivative contracts, together with an awareness of tax implications of common financing transactions.
- the corporate tax implications of employee remuneration including the use of shares in executive remuneration, corporate tax deductions for share option costs and pensions.
- the taxation of intellectual property.
- Understand, explain and apply knowledge of regulatory matters including:
- the corporation tax self-assessment system.
- the processes for resolving disputes together with time limits generally.
- the DOTAS rules and/ or anti-avoidance legislation and their application to a scenario.
- Explain and apply the use of reliefs and planning for their efficient use on a group basis including group loss relief, consortium relief, transfers of trade within a group and definition of a group.
- Explain and calculate gains on disposals of assets, including shares or securities in other companies within the same capital gains group and outside the capital gains group, de-grouping charges and the consequences of transferring assets to an overseas group company.
- Explain and apply the taxation of different business structures and of acquisitions and disposals including branch versus subsidiary, joint ventures, partnerships, close companies, real estate investment trusts, and company reconstructions, company purchase of own shares and demergers. Candidates will not be examined on the overseas tax aspects of cross-border mergers.
- Explain and apply UK reporting and other UK company compliance concerning transfer pricing.
- Explain and apply knowledge relating to overseas tax matters including:
- company double tax relief
- dividend exemption
- branch exemption
- controlled foreign companies legislation
- taxation of exchange gains and losses
- the tax treatment of profits accounted for in a foreign currency and functional foreign currency election
- worldwide debt cap and thin capitalisation
- Explain and apply significant cases and developments as they affect UK corporate tax.
- Understand and apply deferred taxation.
- Demonstrate an awareness of Stamp Taxes in a group context.
3) Tax planning skills
Candidates will be able to advise on alternative tax treatments to defer or minimise tax liabilities. Candidates will also be able to understand the interaction of taxes in given scenarios and to identify and discriminate between tax evasion and tax avoidance.
In the assessment, candidates may be required to:
- identify legitimate tax planning measures to minimise tax liabilities.
- evaluate and advise on tax strategies to meet business objectives.
- evaluate and advise on alternative tax strategies relating to corporate transformations.
- recognise, explain and communicate opportunities to use alternative tax treatments.
Candidates may bring into the examination any volumes from the following:
- Tolley’s Yellow Tax Handbooks and Tolley’s Orange Tax Handbook
- CCH Tax Statutes and Statutory Instruments Red book, including the index volume, and the CCH Green Book (VAT)
- HMSO copies of taxing statutes.
Publications brought into the examination must be bound copies. They can be underlined, sidelined and highlighted. Annotating, use of ‘post-its’, tagging and folding pages is NOT allowed.