Updated: Dec 14, 2020
This article offers advice on how students should prepare for the Tax Compliance (TC) exam. Written by a prize-winning ACA tutor who has a 92% student pass rate and won a prize for TC after scoring 88%, this is a must read for any student preparing for their TC exam.
How to Pass the ACA TC exam
Tax is very technical and the TC exam reflects this: there is a vast amount of technical content to learn for TC. Students who try to prepare for TC by reading the 24-chapter ICAEW Workbook page by page will soon be bogged down by the volume of content. Instead, students should use our prize-winning approach when studying for the TC exam. This can be summarised as follows:
Break the ICAEW Workbook down into examinable areas
Understand the key technical knowledge for each examinable area and leverage the overlaps between areas to save time
Memorise the key technical knowledge for each examinable area
Practice several past exam questions on a single examinable area one after the other
Step 1: Break ICAEW Workbook Down into Examinable Areas
Each technical question in the TC exam relates almost exclusively to a single tax. Therefore, you should treat the TC exam as if it were a number of ‘mini-exams’: Income Tax, Corporation Tax, CGT, IHT, VAT and Stamp Duty. This makes the task less daunting as you now only have a handful of chapters to learn for each ‘mini-exam.’
Furthermore, each tax can then be subdivided. For example, Income Tax can then be subdivided into various sources of income: employment, trading, property, interest and dividends (note that the Income Tax question is always sub divided into at least two parts, with one part on trading income and one part on employment income). Another example is CGT, which can be subdivided into basic CGT liability calculations; CGT reliefs; and international aspects. In fact, we break our TC tuition into 20+ topic areas!
Step 2: Understand the Essential Technical Knowledge for Each Examinable Area and Leverage the Overlaps Between Areas to Save Time
Whilst some parts of ACA may seem irrelevant to you, tax certainly isn’t. An as employee, you will be taxed on the cash and benefits provided by your employer so being aware of which amounts are taxable is useful when negotiating a remuneration package. If one day you decide to start your own business, you will need to decide whether to set up a company or operate as an unincorporated business and each has markedly different consequences for tax. Therefore, you should try to make the content relevant as this will aid your understanding. We make our tax tuition relevant and engaging by grouping interrelated topics together and using diagrams and practical examples relevant to ACA trainees, rather than reading out pages and pages of abstract text. We have included one of our classes below to demonstrate what we mean.
It is also important to appreciate areas which have substantial overlap as this will cut down on your learning time. For example, trading income is calculated in the same way for Income Tax (unincorporated businesses) as it is for Corporation Tax (companies); double tax relief is calculated in the same way for Income Tax, Corporation Tax, CGT and IHT; and being not domiciled has the same impact for CGT as it does for Income Tax.
Step 3: Memorise the Key Technical Knowledge for Each Examinable Area
Given that tax compliance is rules based, there is a lot of specific rule learning for the exam e.g. which employee benefits are taxable / exempt, which expenses are an allowable deduction from trading income. In order to simplify these rules to improve learning efficiency, we summarise the rules for each topic into concise learning notes – an example is included below.
The best way to memorise the content so that it is available to you in the exam room is to read and understand the rules for each topic and then test yourself by reproducing the rules on a blank page, as this will force you to actively recall the information. Taking CGT reliefs as an example, our Learning Notes explain which type of asset each relief applies to, the conditions for the relief to apply and how the relief works. Having read an understood each relief, you can then test yourself by seeing if you can state each relief, which type of asset it applies to, the conditions for the relief and how the relief works. Keep re-reading and re-testing yourself until you can reproduce the reliefs and rules in full.
Step 4: Practice Several Past Exam Questions on a Single Examinable Area One After the Other
After teaching our students the optimal exam technique for a particular type of exam question, we send our students away to practice lots of questions on that examinable area one after the other. This has the following benefits:
It actively tests the technical content you have memorised improving retention
It enables you to apply the prize-winning exam technique demonstrated during tuition
It familiarises you with how the examiners structure questions on the topic
It enables you to identify patterns in how the topic is examined
It enables you to identify weakness areas so that you can focus your technical learning
It familiarises you with the ICAEW CBE software
It enables you to improve your speed so that you don’t exceed your time allocation
Our TC Master Plan categorises all the past exam questions by topic to make it easy to practice lots of questions on the same topic.
Once you are scoring 70% on each area you should then start sitting full mock exams under strict exam conditions so that you can recreate the exam experience in full.
The video below is a sample from our TC Masterclass series. Each class focuses on a frequently examined topic and explains the key technical concepts in a simplified way before demonstrating the optimal exam technique by working through recent past exam questions in full.
Need Help Passing the ACA TC Exam?
Our TC courses focus on the most frequently examined technical content and demonstrate the optimal exam technique for each TC question. Additional sample classes from the online course, Learning Notes and our TC Master Plan can be found here.
About the Author
Kieran Doe is a Senior ACA Tutor at ACA Masters. Kieran won ICAEW prizes for his performance in Financial Accounting and Reporting, Tax, Financial Management, Audit, Business Strategy and Case Study. This is in addition to winning several prizes at university for various Accounting, Management, Business and Economics subjects.
Kieran’s tuition is based around the learning techniques and exam strategies which enabled him to win prizes for all the subjects he teaches. Under his guidance, several of his ACA students have also won ICAEW prizes.