Cross Border and Environmental Taxes

First Sitting May 2025, see Exam Noticeboard

Paper aim

To enable candidates to apply the legislation and gain the detailed technical knowledge and professional skills to identify and resolve

Value Added Tax (VAT) Customs Duty (CD) issues that arise in the context of businesses undertaking activities which take place within the Great Britain (GB) and the European Union (EU) in respect of Northern Ireland (NI).
Excise Duty (ED) and Environmental Tax (ET) issues arising within the Great Britain (GB) and the European Union (EU) in respect of Northern Ireland (NI). ET areas to be covered will be Aggregates Levy (AL); Climate Change Levy (CCL); Landfill Tax (LT) and Plastics Packaging Tax (PPT)

Candidates will be required to use technical knowledge and professional judgement to identify, explain and evaluate alternative tax & duty treatments and to determine the appropriate solutions to taxation issues, giving due consideration to the needs of clients.

Candidates should consider the commercial context and impact of recommendations in making such judgements.

Prior knowledge

The paper is aimed at students who have had 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

This paper will be a written exam that is 3 hours 30 minutes in length.

The questions will be for 10, 15 or 20 marks and there will normally be six questions.

The pass mark is 50%.

Syllabus

The syllabus for this paper comprises two elements:

VAT and CD relating to activities within the UK and EU as it affects NI;
ED and ET relating to activities within the UK and EU as it affects NI

The detailed syllabus grid for this paper can be found at:

www.tax.org.uk/prospectus-and-syllabus

At least 70% of the VAT on Cross-Border Transactions & Customs Duties paper will comprise material highlighted in the detailed syllabus grid as “core”.

The paper will be split as follows:

VAT and CD – 70% - 85%

ED and ET – 15% - 30%

Questions may cover a single tax or multiple taxes. Candidates are expected to determine which areas to focus on as a split of marks between VAT and CD will not generally be provided. Subject to the specifics of individual questions, it may be that ED or ET aspects are integrated into a predominantly VAT/CD scenario, or vice versa. In such circumstances splits will be provided between VAT/CD and ED/ET.

ED and ET will be examined to Awareness level only.

For all Advanced Technical papers, it is expected that candidates have a good knowledge of the Law, Professional Responsibilities and Ethics and Principles of Accounting manuals and so questions may be set which include terms and concepts relevant to the tax being examined and candidates may be required to demonstrate an understanding of those terms and concepts and the effect on the tax outcomes in their answers

The following learning outcomes should be read in conjunction with the detailed syllabus grid, as the areas listed below are not exhaustive.

Learning outcomes

Candidates will be able to analyse, evaluate and calculate the VAT, CD, ED and ET consequences of actions for businesses in given scenarios. This will involve interpreting and communicating UK & EU legislation (for NI) and applying it to a scenario.

Communication skills
- Communicate complex tax issues clearly and professionally.
- Prepare suitable advice to explain tax liabilities with supporting calculations.
- Recommend appropriate tax-planning advice.
- Identify further information required to complete VAT, & duty CD, ED and ET calculations..
- 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.
Technical skills

VAT

Understand the territorial scope of VAT and the requirement to become VAT registered either in the UK or elsewhere in the EU, including:
- for non-EU established businesses.
- the different types of taxable person and the circumstances in which VAT registration may apply to them, including tax representatives and agents.
- The NI protocol as it applies to VAT and duties.

A detailed knowledge of VAT registration requirements in EU Member States or the rest of the world is not required.

Understand how an obligation to VAT can arise including:
- the meaning of supply and consideration, and how supplies differ in respect of goods and services; and when treated as single or multiple supplies.
- the different rules relating to the time and place that supplies and importations are deemed to occur, including importations and cross border services.
Understand and calculate VAT liabilities, including:
Demonstrate an understanding of how the VAT rules apply to different classes of business operating within the EU, including:

Customs Duties

Demonstrate an understanding of the legislative framework of CD in the UK, including:
- the territorial scope of the UK and EU (for NI) for CD purposes, quota requirements, Common Agricultural Policy import charges, controls and licences .
- an understanding of the Union Customs Code.
Understand how liabilities for CD are calculated including:
- how goods are classified for CD purposes, the valuation methods available, and how this interacts with the VAT valuation.
- the different reliefs available for CD, including the storage of goods in approved warehouses, deferment and the requirement for guarantees.
Understand export procedures, valuations, and controls.

Excise Duties

Understand the statutory definitions of liquors, and have a general awareness of the manufacture of spirits;
Understand the controls, record keeping requirements and warehousing of tobacco products
Understand how excise warehouses work, what goods can be stored there and how they are controlled;
Understand the different types of Registered Consignees, duty deferment and the controls relating to the movement of excise goods.

Aggregates Levy

Understand the scope of AGL and the charging provisions
Understand the registration requirements
Demonstrate an understanding of accounting and administrative issues
Understand credits and repayments in relation to AGL

Climate Change Levy

Understand the scope of CCL and the charging provisions
Demonstrate knowledge in respect of the time of supply for CCL purposes
Understand the different rates applying to CCL
Understand the registration requirements
Demonstrate an understanding of accounting and administrative issues
Understand credits and repayments in relation to CCL

Landfill Tax

Understand the scope of LT and the charging provisions
Understand the registration requirements
Demonstrate an understanding of accounting and administrative issues
Understand credits and repayments in relation to LT

Plastics Packaging Tax

Understand the principles covering the charging of PPT including rates, payments, exemptions and credits
Understand the registration requirements
Demonstrate an understanding of enforcement and administrative issues affecting PPT
Understand various miscellaneous areas such as groups, business splitting, TOGC, and tax representatives
Demonstrate an understanding of the penalty provisions including criminal proceedings

Matters affecting All Taxes

Candidates may also be examined on matters affecting all taxes, such as Disclosure of Tax Avoidance Schemes, General Anti-Avoidance Regulations, and Alternative Dispute Resolution

Tax planning skills

Candidates will be able to advise on alternative tax & duty treatments to defer or minimise liabilities. Candidates will also be able to understand the interaction of taxes in given scenarios and to identify and discriminate between tax & duty evasion and avoidance.

In their assessment candidates may be required to:

identify legitimate tax & duty planning measures to minimise liabilities.
evaluate and advise on alternative tax & duty strategies relating to businesses.
recognise, explain and communicate opportunities to use alternative tax & duty treatments.