Overall, this was a pleasing set of results given the technically challenging and complex nature of the paper. There were some excellent papers gaining marks of 70+ with the highest mark scored being 91, which really was a paper of a very high standard.
It was disappointing to note however, that there were lots of marks in the 40 and below range. The main reason for this was lack of detail in the answers and lots of parts of questions missed out, which indicated an inability to manage time. My advice had always been that if you were unsure how to deal with something then leave it out and move on.
In terms of the specific points noted on each question, the following observations were made:
Despite my advice that this is a skills based paper were scenario questions would be dealt with, the lack of detail in some answers was quite disappointing. I have always given guidance that as you are effectively in a situation which requires you to deal with a client, then an explanation of the relevant rules is required and then application of the rules is needed to answer the question in the scenario.
This question needed a full explanation of the rules on associated companies, the rules on loss groups and also on chargeable gains groups. You were then required to conclude which companies in the group were part of each of these different types of groups and to compute overall profits and CT payable after making efficient use of losses. Explanation was also needed on which losses could be group relieved and unfortunately, a significant majority of people concluded that brought forward losses could be moved around the group – which was not the case.
There is still a clear passion for some students to completely ignore my advice and launch straight into calculations thinking that is all they need to do to obtain marks. This is not the case.
A lot of answers missed out the availability of rollover relief and therefore conveyed an inability to deal with a range of rules in the once scenario – something which is a key skill if you work in tax.
Another disappointing point was that a high number of students wrote in detail about the availability of Entrepreneurs’ relief and BPR. These are reliefs available to INDIVIDUAL people only and are not reliefs which companies can take advantage of. This showed confusion between the distinction of companies and individuals and on the whole was very surprising for me as we have always discussed these reliefs in the context of individuals.
There were also some PE profits within the scope of charge to CT in the UK and whilst some people did deal with this, the majority failed to even consider DTR or made any attempt to calculate it.
The other parts of the question required students to consider the difference between setting up as a PE or a subsidiary in a foreign country. This had been covered in class and also in questions posted on VITAL. Again answers lacked detail and failed to use the numbers to calculate the gain on the transfer of assets. It was apparent that time had been wasted on the first part of question one without really leaving enough time to consider the additional parts.
The answers to the ethics part were again very brief and disappointing. A similar question had been considered in the workshop but the fact that students thought one sentence answers to this part would suffice, indicated that they had not used all of the resources on VITAL and had failed to study the ethics chapters themselves.
I will say at this point that there is a really disappointing attitude amongst a number of students who expect to be spoon-fed then are taken aback when I ask them to self-study parts of the syllabus. 150 study hours are allocated to each module and given that the face to face contact on this module was around 50 hours (which by other modules standards is very generous) then students should have done 100 hours of private study outside the classroom.