Taxation of Larger Companies & Groups

Taxation of Larger Companies & Groups (name change for 2023)

Paper aim

To enable candidates to apply the legislation, and gain the detailed technical knowledge and professional skills to identify and resolve complex Corporation Tax issues that arise in the context of larger companies and groups.

This paper is primarily aimed at those working in the Corporate Tax departments of larger accountancy firms and large businesses. Scenarios will typically be based around multinational groups and larger companies that may be listed, with no individual controlling shareholders. Whilst a high level of technical knowledge is required, it is recognised that many complex issues will be dealt with by specialists and therefore candidates are not expected to have deep knowledge of all tax areas but should be able to identify what the potential tax issues are.

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 complex issues, giving due consideration to the needs of clients. Candidates will need to consider the commercial context and impact of recommendations in making such judgements.

Prior knowledge

This paper is aimed at candidates who have had several years of practical experience working in the 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 the following elements:

  1. Corporation Tax, including Corporation Tax on Chargeable Gains;
  2. Capital Allowances; and
  3. Stamp Duty and Stamp Duty Land Tax (awareness level).

In addition, candidates are expected to have a good knowledge of the Law, Professional Responsibilities and Ethics, and Principles of Accounting manuals, and be familiar with the terms and concepts used.

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

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

At least 70% of the Corporation Tax element will comprise material highlighted in the detailed syllabus grid as “core”. The following learning outcomes should be read in conjunction with the detailed syllabus grid for this paper.

Learning outcomes

Candidates should be able to analyse, evaluate and calculate the tax consequences of actions for larger companies and groups in given scenarios. This will involve advising and assisting clients in adhering to the requirements of tax statutes and relevant regulations.

In the assessment candidates may be required to demonstrate:

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 computations 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 both the CIOT.
    • Interpret and communicate UK tax legislation and apply it to a scenario.

2. Technical skills

The detailed requirements are set out in grids and other documents referred to in the Syllabus section above. In summary, the key technical skills to be assessed on this paper are to be able to:

    • Understand, explain and prepare UK corporation tax computations of large companies. This will include:
      • a sound knowledge of adjustments that will feature in the UK corporation tax computations of multinational companies and groups together with a working understanding of other areas in which such clients will take advice. Even though they are not specialising in such areas candidates will be expected to have a reasonable knowledge of them so that they could coordinate the work of the firm's specialists when advising their clients.
      • accounting standards in so far as they are relevant to tax and to understand the tax consequences of adopting alternative accounting treatments.
      • the taxation of loan relationships and derivative contracts, together with an awareness of the tax implications of common financing transactions.
      • the corporate tax implications of employee remuneration including the use of shares in executive remuneration, corporate tax deductions for share option costs and pensions.
      • the taxation of intellectual property.
    • Understand, explain and apply knowledge of regulatory matters including:
      • the corporation tax self-assessment system
      • the role of the Senior Accounting Officer.
      • the processes for resolving disputes together with time limits generally.
      • the DOTAS rules and other anti-avoidance legislation and their application to a scenario.
    • Explain and apply the use of reliefs and planning for their efficient use on a group basis including group loss relief, consortium relief, transfers of trade within a group and definition of a group.
    • Explain and calculate gains on disposals of assets including shares or securities in other companies within the same capital gains group and outside the capital gains group, de-grouping charges and the consequences of transferring assets to an overseas group company.
    • Explain and apply the taxation of different business structures and of acquisitions and disposals including branch versus subsidiary, joint ventures, partnerships and company reconstructions. Candidates will not be examined on the overseas tax aspects of cross-border mergers.
    • Explain and apply UK reporting and other UK company compliance concerning transfer pricing.
    • Explain and apply knowledge relating to overseas tax matters including:
      • double tax relief
      • dividend exemption
      • branch exemption
      • controlled foreign companies legislation
      • taxation of exchange gains and losses
      • the tax treatment of profits accounted for in a foreign currency and functional foreign currency election thin capitalisation and corporate interest restriction.
      • Explain and apply significant cases and developments as they affect UK corporate tax.
  • Demonstrate an awareness of:
    • broader tax issues which may affect a company and in relation to which the prime requirement is to identify the problem, which may in practice be dealt with by a specialist.
    • aspects of law that are relevant to a tax adviser including law in relation to disposing of a business, intellectual property and land law.
    • Stamp Taxes in a group context.

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 tax strategies to meet business objectives.
    • evaluate and advise on alternative tax strategies relating to corporate transformations.
    • recognise, explain and communicate opportunities to use alternative tax treatments.