by David Harrowven
18 May 2010
The key to passing the Paper F6 exam is picking up the easier marks as quickly as possible. This should give a well-prepared student in the region of 40 marks, and leave plenty of time to gain sufficient of the harder marks to achieve a pass. It is, therefore, important that students appreciate where to find these easier marks. Typical areas to alert your students to are:
- calculation of an adjusted trading profit or loss
- the main benefits in kind (motor cars, beneficial loans and accommodation)
- capital allowances
- basic tax computations.
These areas are all computational and there are proforma layouts that can be used in each case. Note that for 2009-10 there is no definitive proforma capital allowances layout because of the interaction of the annual investment allowance, the 40% first-year allowance and the writing down allowance. Teachers should stress to students that they should practise these proforma until they are second nature. In every exam sitting, it is amazing to see some students attempting a capital allowances computation, for example, for what seems the very first time.
Rather then teaching them separately, it would be useful to highlight the differences between the income tax and corporation tax treatment in the following areas:
- capital allowances (private use)
- capital gains (indexation and annual exemption, not to mention that for corporation tax purposes gains are included as part of the profits chargeable to corporation tax, while for individuals there is a separate tax)
- relief for trading losses
- adjusted trading profit or loss (private use).
Make full use of my articles on Paper F6. This article, Finance Act 2009 can be found in Related Documents at the bottom of this page. The Finance Act 2009 article covers some important changes such as capital allowances for motor cars, leased motor cars, additional loss relief, extended corporate loss relief, overseas dividends, penalties for failure to notify a new taxable activity, the appeals procedure, assessments and claims. Such changes are often examined in subsequent sittings. VAT is generally the tax that causes most problems but my VAT article covers the most important areas (the article can be found in Related Documents at the bottom of this page). This is updated every few years or when there are any changes.
Emphasise to students how important it is to not waste any time picking up the easier marks. So, when setting practice questions, a mark of 7/10 in 15 minutes is better than 10/10 in 30 minutes. Time in the exam is a precious resource and must not be wasted. When reviewing a student's work, ensure they are correctly using workings. An incorrect calculation with no workings will not score any marks but often students produce far too many workings instead of incorporating calculations within the body of the main computation. Explanations should be avoided when only a calculation is required. Make sure answers are easy to follow. If you cannot follow them then markers will also have problems. Although there are no marks as such for presentation, poor presentation can mean that a student does not get full credit for their answer. Poor presentation is also a factor that is taken into account when reviewing a marginal script.
Teachers should also make sure that students are aware of the importance of a question's requirements. The requirements are the essential link between the information given in the body of a question and the answer that is required. A great deal of time goes into making sure requirements are as clear as possible. Therefore, if a requirement says 'calculate', then this means exactly that. No need for explanations. If a requirement says stop your computation at this point, then that is when a student must stop. The most common mistake is to calculate a tax liability when it is not required. This may be to avoid repetition within a paper, to avoid an unnecessarily complex computation or simply because a question would otherwise be too long for the available marks.
David Harrowven, examiner, Paper F6