Domestic Indirect Taxation

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), Insurance Premium Tax, (IPT), Stamp Duty (SD), and Stamp Duty Land Tax (SDLT) issues that arise in the context of businesses undertaking activities within the UK.

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 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 five elements:

  1. VAT relating to activities within the UK
  2. VAT on importations of goods or services into the UK and EU as it affects NI
  3. IPT
  4. SD
  5. SDLT

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 Domestic Indirect Taxation paper will comprise material highlighted in the detailed syllabus grid as “core”.

The split of the paper between the 4 elements will be:


MinimumMaximum
VAT70%90%
IPT SD & SDLT10%30%

Whilst the syllabuses of the Law, Professional Responsibilities and Ethics, and Principles of Accounting E-assessments are not specifically examined in this paper, candidates are expected to be familiar with the terms and concepts contained in them.

The following learning outcomes should be read in conjunction with the detailed syllabus grid.

Learning outcomes

Candidates will be able to analyse, evaluate and calculate the tax consequences of actions for businesses in given scenarios. This will involve interpreting and communicating UK tax legislation and applying it to a scenario

1) 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 tax calculations and/or returns 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.

2) Technical skills

VAT

    • Understand how and when VAT becomes chargeable in the UK including knowledge of:
      • the territorial scope of VAT and the requirement to become VAT registered in the UK.
      • the different types of taxable person and the circumstances in which VAT registration may apply to them.
      • the meaning of supply and consideration, and how supplies differ in respect of goods and services; and when treated as single or multiple supplies.
      • VAT liabilities, including deemed values, and income that does not fall within the tax.
      • the different rates of VAT and in what circumstances they apply.
      • the different rules relating to the time that supplies are deemed to take place.
    • Identify the deductions and reliefs that are available against a VAT charge, including non-deductibles, and
      • Calculate partially recoverable VAT and understand different methods of calculating this.
    • Understand how VAT applies in special circumstances including:
      • special accounting schemes and to particular types of person.
      • in relation to differing supplies of property and construction.

SD

  • Understand the various rates of charge in respect of SD and how these apply.Understand how SD applies to stocks and shares
  • Understand how SD applies in respect of groups of companies

SDLT (LBTT for Scots candidates)

  • Understand the various rates of charge in respect of SDLT and how these apply.
  • Understand differing transactions, interests and consideration in respect of SDLT, including:
    • how SDLT applies in respect of high residential value properties and property leases and rentals
    • how SDLT applies to partnerships and linked transactions.
    • Demonstrate an understanding of the different reliefs available for SDLT.

Note: - Stamp Duty and SDLT (LBTT for Scots candidates) will be examined to awareness level only.

IPT

  • Understand the scope and charging provisions in respect of IPT including:
    • the various registration requirements in respect of IPT and the differing types of person that registration can apply to
    • the tax points in respect of IPT and the various rates that could apply.

Administration

Demonstrate an understanding of the administration of VAT, IPT, SD and SDLT including filing deadlines and the penalty regime for non-compliance; and HMRC’s powers to investigate. 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

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 alternative tax strategies relating to businesses.
    • recognise, explain and communicate opportunities to use alternative tax treatments.