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Exam Approach Interview: P6 Advanced Taxation

Interviewer: Welcome to the P6 Examiner’s Approach interview.

The following is an Examiner’s Approach interview for Paper P6,

Advanced Taxation. It is important to note, that this refers to the

UK Taxation paper, rather than ACCA’s variant papers.

The content of this interview has been prepared by the examiner,

working with the Qualifications team at ACCA, and is presented by

actors representing an interviewer and the examiner in discussion.

For more detail on the examiner’s approach, please see the article

produced by the examiner in the November/December 2006

archive edition of student accountant and also refer to the changes

in the most recent Finance Act in articles published annually in

student accountant.

The examiner is Rory Fish. During the 1980s, Rory worked in the

tax department of an international firm of accountants. Since 1991

he has run his own business lecturing and writing teaching

material. He has been a member of the ICAEW since 1986 and a

member of the Institute of Taxation since 1987. He was appointed

as an ACCA examiner in 2006.

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Interviewer: I suppose it would be most appropriate to start off by asking where

P6 fits within the overall structure of the ACCA Qualification.

Examiner: The Professional Level of the ACCA qualification syllabus is divided

into two modules – Essentials and Options, with Essentials coming

before Options. Both these modules have been set at an

intellectual level equivalent to that expected of a student taking a

Masters degree.

The focus of the syllabus at the Professional level is to build upon

the technical skills already acquired, and to explore more advanced

professional techniques, skills and values which are required by

the expert accountant acting in an advisory or consultancy role at a

senior level.

Studying P6, Advanced Taxation, as an Options paper will allow

the student to develop their expertise in this area; drawing upon

knowledge obtained from studying the underpinning F6 Taxation

paper in the Skills module and from the P1, Professional

Accountant paper.

Interviewer: From what you have just said, P6 is connected to other papers

within the ACCA Qualification. What are the links with other

papers, or with other components?

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Examiner: F6 introduced the students to the subject of taxation and gave a

firm grounding in this area.

The knowledge of F6 UK will be assumed when students

commence their studies of P6 UK. This gives a strong

underpinning for the P6 UK Advanced Taxation paper, which is

likely to be chosen by people working in a tax environment. It is

essential that students fully understand the taxation topics studied

in F6 before commencing their P6 studies.

A working knowledge of the ethics studied in P1 Professional

Accountant and of the Professional Ethics Module will help

students in this paper.

Finally, all knowledge and capabilities acquired in P6 can start to

be applied, in context, within the practical experience

requirements. The relevant Performance Objectives to taxation are

Options objectives 19 and 20.

Interviewer: What is the overall concept or theme for P6 UK as a paper?

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Examiner: The aim of Paper P6 UK is to ensure that candidates can provide

clients – individuals and businesses – with the information and

advice they require regarding the impact that the major UK taxes

may have on their financial decisions and situations.

The emphasis will be on the practical application of tax rules to

client scenarios, and the production of professional documents

incorporating helpful, clear advice.

It should be noted that the ability to communicate with clients, HM

Revenue and Customs, and with other professionals, is one of the

five main capabilities required of candidates sitting Paper P6.

According to Benjamin Franklin, “In this world nothing is certain

but death and taxes.”

With this paper, we gain a greater understanding of what tax is

and what is due and how to plan a client’s tax affairs.

Interviewer: The syllabus for P6 UK is structured into five main sections. Can

you briefly explain the main content of these syllabus sections?

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Examiner: The first syllabus section, A, requires an in-depth knowledge and

understanding of the UK tax system, including advanced capital

taxes. Students will study more advanced topics within taxes than

have been seen previously at the Fundamentals level. Students will

also be introduced to inheritance tax and the use of trusts.

Section B examines the importance of taxation to personal and

corporate financial management. It covers the principles underlying

personal and corporate financial management, the impact that

specific circumstances and expectations have on financial

objectives, common forms of investment and financial products,

and how tax and other considerations can impact upon financial

decisions.

Section C covers the impact of relevant taxes on various business

or personal situations, specifically considering the interaction of

taxes. This section includes how alternative ways of achieving

personal or business outcomes may have different tax

consequences, together with the tax advantages and disadvantages

of these. Statutory obligations, including time limits and

implications for non compliance, are also covered.

Section D covers tax planning. This looks at how to minimise

and/or defer tax liabilities through different types of investment,

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how to mitigate taxes through legitimate tax planning measures

and how appropriate these measures are for the taxpayer.

Candidates will be expected to refer to numerical analysis and

reasoned argument for any recommended tax mitigation measures

and cover the ethics and professional issues arising from tax

planning advice, as well as examining current tax issues.

Section E covers communications with clients, fiscal authorities

and other professionals. This includes giving advice, making

recommendations, and drawing conclusions. Students will be

expected to provide appropriate supporting documentation and/or

calculations, as well as stating any assumptions made. All

communications will need to be presented in a format and

language appropriate to the form of communication and to its

audience. Relevant non-tax factors will also be considered.

Interviewer: Having explained the main content of the syllabus for us, can you

tell us how the exam itself is structured?

Examiner: P6 UK is a Professional Options paper; it means that students can

choose whether or not to sit this paper or a different option.

As with all papers within the Professional level, the writing time for

this exam is three hours. All ACCA three hour papers have an

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additional 15 minutes reading and planning time, within which

students can read the paper, understand the requirements and

choose which questions to answer. An article explaining how this

time should be productively used has been published in the

student accountant magazine in the August 2007 edition.

Interviewer: What exactly can students do in reading and planning time?

Examiner: They can make notes and plan answers. This may only be done on

the question paper and not on the answer booklet. The answer

booklet cannot be used until the exam begins.

Interviewer: How would you suggest this time is best used in the P6 exam?

Examiner: As the P6 UK paper contains optional questions, I suggest that

students use this time to read the section B questions first. This

will give them an opportunity to determine which two optional

questions they will attempt. Secondly, they can determine the

order in which to attempt their four questions and thirdly, split out

the time allocated to each question. Any balance of the reading

and planning time should be spent on understanding the facts of

the scenario given in Questions 1 and 2 and their requirements.

Interviewer: What kind of questions will appear in the exam?

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Examiner: As the P6 exam is both a computational and discursive paper,

students must be prepared to provide answers that are supported

by calculations, referenced workings and to give full, written

explanations in support of computational answers when required.

Much of the paper will require students to provide written rather

than numerical solutions.

Interviewer: How many questions are there in the exam and what choice, if

any, exists?

Examiner: As can be seen here, the exam is divided into two sections, A and

B.

Section A contains two compulsory questions for a total of 50-70

marks. The questions can potentially assess any area across the

syllabus, and may typically assess capabilities from several

sections. Marks will not normally be allocated evenly between the

two questions. For example, in the pilot paper, Q1 carries 39

marks and Q2 carries 25 marks.

Section B consists of three 15-25 mark questions, two of which

must be answered. Each question will have the same number of

marks, to balance the marks remaining after Section A. For

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example, in the pilot paper, each question in Section B carries 18

marks.

Questions will be scenario based and will normally involve

consideration of more than one tax, together with some elements

of planning and the interaction of taxes. The questions in Section A

will typically feature letters, memos and emails from managers or

clients, with the intention of simulating the information a student

might receive in practice.

For more information about the exam itself and how it is

structured, there is a pilot paper and past exam paper available on

the ACCA website.

Interviewer: Thanks for explaining that. What would you say are the key

features of the P6 examination paper?

Examiner: The exam style requires students to address a practical,

commercial situation by reference to a number of different taxes.

They need a sound knowledge of the rules and should spend time

thinking about what is, and what is not, relevant to their answer.

They should be guided by the number of marks on offer when

deciding how much detail to include in their answers.

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Interviewer: How should students deal with a requirement that asks the

candidate to do something AND something else?

Examiner: Because some questions may ask the candidate to do something

‘and’ something else, the candidate may have to use judgement to

decide how much effort to devote to each aspect. This will be

based on the difficulty of different cognitive levels, for example

‘describe’ is usually easier than ‘assess’. However, markers will be

asked to exercise quite a lot of flexibility in awarding marks in this

situation.

Interviewer: There are professional marks available in this paper. What are

professional marks?

Examiner: Between 4 and 6 professional marks will be awarded within

Section A for the form and tone of an answer, for its structure and

for the strength and persuasiveness of arguments put forward.

There is an article which was published in the October 2007

edition of student accountant explaining what professional marks

are awarded for. This article will give more information on the

awarding of these marks.

Interviewer: And are Ethics examined in this paper?

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Examiner: Ethics may be examined somewhere in this paper within a

business or personal context. There is also an article on how this is

assessed in the September 2007 edition of student accountant.

Interviewer: What advice would you give about revising effectively for, and

passing, P6 UK?

Examiner: As a key strategy of their revision, students should ensure they

have memorised the rules and proformas relating to the various

taxes. They might consider preparing concise revision notes first

and then spend time learning and testing themselves on the rules.

Finally, they should apply their knowledge to exam standard

questions.

Interviewer: So it’s useful to practise questions then?

Examiner: Yes, very much so. Students should practise questions under exam

conditions. It’s important not to refer to the answer and to allow

themselves the correct amount of time. This will highlight the main

areas where more revision is needed. It will also help to build

confidence in dealing with exam standard questions and improve

time management skills.

Interviewer: What else must students remember during the exam itself?

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Examiner: Addressing all of the requirements is the key to earning sufficient

marks in the exam. This is particularly important in the Section A

questions where the detailed requirements are embedded in the

body of the questions. Students should read the questions very

carefully and identify all of the tasks they have been asked to carry

out. They should then keep the tasks in mind so that they do not

spend time on areas which have not been asked about. I would

emphasise that students will not earn marks for work done in the

exam unless it relates to satisfying the requirements of the

question.

Interviewer: What would be your top three tips for the P6 UK candidates?

Examiner: My first tip relates to revision. Knowledge and understanding of the

technical content of F6 is vital if a student is to be successful at

P6. When revising, students must beware of spending all of their

time on the areas that are new, at the expense of F6 knowledge.

Paper P6 is directly underpinned by Paper F6 and there are many

marks in P6 in respect of F6 knowledge.

My second tip relates to performance in the exam. Exam success is

all about earning sufficient marks in the time available; I have

already mentioned the importance of addressing all of the

requirements in this regard. Students must appreciate that the

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marks available give a clear indication of the time they should

spend on each part of a question. Once they have identified and

read all of the requirements they should then think about how to

satisfy them in the amount of time indicated by the number of

marks available.

My third tip is that students should always think before writing. If

they are about to carry out a calculation they should consider if the

calculation is necessary to satisfy a requirement and whether or

not there is a more straightforward way of arriving at the figure

needed. Before writing narrative, students should satisfy

themselves that the narrative has been asked for, or whether

calculations alone would be sufficient. It all comes back to the

requirement.

Interviewer: Is time management important then?

Examiner: Yes, very important. Students must try and ensure that they

manage their time effectively, both during revision and in the

examination itself. Spending too long revising detailed areas of the

syllabus is less productive than developing a proper understanding

of the main principles, ideas and concepts within each syllabus

section and subject area. Remember that students should

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maximise their potential for earning marks and spend their time in

proportion to the marks available – then move on.

Interviewer: What else must students remember during the exam itself?

Examiner: Students must ensure that they apply their knowledge and

understanding to the case or scenario provided, where this is

required.

Most marks will be available for application and analysis, for

assessing a situation, using judgement or for developing points and

arguments. This also applies to professional marks which were

referred to earlier.

Interviewer: What is most important during revision?

Examiner: Remember that effective revision involves plenty of question

practice. There is no substitute for applying knowledge to

situations and using that knowledge within real business contexts

as can be found in the pilot paper and in past exam questions. It is

also worth dissecting relevant media news stories and applying this

form of analysis to these situations.

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Interviewer: What do you believe to be the main pitfalls in preparing for and

taking the P6 UK exam?

Examiner: Firstly, some students do not have sufficient precise knowledge of

the UK tax system. This makes it very difficult for them to deal

with the relatively sophisticated tasks that are set at paper P6. As I

have already mentioned, it is not just the knowledge that is new at

P6 that is important, knowledge of the F6 material is also vital.

Second, there is evidence that some students do not manage their

time carefully enough in the exam. This means that they spend too

much time on some parts of questions such that they have

insufficient time to address four complete questions. Students

should be guided in the amount of detail they include in their

answers by the number of marks available for each part of each

question together with the instructional verb.

And finally, some students do not focus sufficiently on the

requirements. Marks will only be awarded for answers that address

the requirements; providing unsolicited information is therefore a

waste of time. Students should imagine that in the exam they are

being paid by a client for the advice they give. The client will only

pay them for the advice he has asked for.

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Students continue to believe that possessing detailed knowledge is

the key to exam performance. This is true to some extent, but the

highest marks are awarded for those who use their knowledge in

the proper context. The main pitfall here is that students feel the

need to demonstrate their knowledge, whether required or not, and

it is because of this that many students fail to complete the exam.

Remember that writing 10 good points for a five mark requirement

is likely to be a waste of effort.

Interviewer: Do students get rewarded for including bullet lists and diagrams?

Examiner: Very few marks are available for demonstrating knowledge in a

vacuum or for bullet lists or for diagrams. If a diagram is included

it should be properly explained. Candidates should ensure that

every point made refers directly or indirectly to issues within the

question requirement or to information made available. For this

they will be well rewarded.

Interviewer: Are organisational skills important in the exam?

Examiner: Yes, very much so. Students must try to ensure that they are

disciplined in answering questions once they have chosen which

questions to answer. Although they can answer questions in any

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order, they should try and answer each part of a question in the

order written and keep them together on the answer script.

Interviewer: It is clearly important to follow the above tips and avoid any

common pitfalls in exam revision and performance. What further

information about student performance would you give which

might help students prepare for exams?

Examiner: After each examination session, all ACCA examiners are required to

produce an exam report. These reports highlight key issues arising

in the last exam and focus on where students performed

particularly well or badly. These are published in February and

August and can be found under paper resources for each paper

which can be accessed through the website.

In addition, after each exam session has been completed, the exam

review board meets. This is a board consisting of ACCA internal

Education staff and six representative members of the approved

learning partner community. Minutes from this board summarise

the comments made by tuition provider representatives, report

survey results about the exams from student questionnaires and

detail the responses. Again, the minutes from the exam review

board are available on the website.

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Interviewer: And finally, what would be your concluding advice about the P6

UK exam?

Examiner: First, students must always read the question as carefully as they

can, identifying the tasks to be performed and the instructional

verbs contained within each requirement.

Second, it is important to properly understand the requirements,

assessing how much the examiner is really looking for in each

question part and being fully aware of the marks available for each

requirement.

Finally, don’t forget that answers given should relate to the

question actually asked, not the one that a candidate would have

liked to answer.

Interviewer: Thank you very much for sharing your insight into this exam paper.

I’m sure it has given students and tutors lots of useful information.

Examiner: Thank you.