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How to Pass the ACA Tax Compliance (TC) Exam

Updated: 2 hours ago


Summary

This article offers advice on how to pass the ACA Tax Compliance (TC) exam. Written by a multiple ICAEW prize-winning ACA tutor who scored 88% in the ACA Tax exam, this is a must read for any student preparing for their TC exam.

How to pass the ACA TC exam

By nature, 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 Study Manual page by page will soon by 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:

  1. Break ICAEW Study Manual down into examinable areas

  2. Understand the key technical knowledge for each examinable area and leverage the overlaps between areas to save time

  3. Memorise the key technical knowledge for each examinable area

  4. Practice several past paper exam questions on a single examinable area one after the other

Step 1: Break ICAEW Study Manual down into examinable areas

Each technical question in the TC exam almost exclusively relates to a single tax. Therefore, you should treat the TC exam as if it were a number of ‘mini-exams’ on each tax: 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 subdivided into at least two parts, with one part on trading income and one part usually 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 classroom and online tuition into 20+ topic areas!

Step 2: Understand the key 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 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 a sole trader as 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 by this.

It is also important to appreciate which areas 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 presents the same issues 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, or 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 a concise learning document – 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 materials explain which type of assets each relief applies to, the conditions for the relief to apply and how the relief works. Having read and understood each relief, you can then test yourself by seeing if you can write down each relief, which types 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 paper exam questions on a single examinable area one after the other

After using lots of previous TC exams to teach our students the optimal exam technique for each type of question, we send our students away to practice lots of questions on a single 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 as 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

Once you are scoring 70% on each area you should then start sitting full mock exams so that you can recreate the exam experience in full.

The video below is a small sample from our TC exam masterclass video series and demonstrates how our TC tuition works.

Further guidance

Details of our TC classroom tuition, our TC exam masterclass video series, one-to-one tuition and our learning materials can be found here.

About the author

Kieran Doe is a Senior ACA tutor at ACA Masters. Kieran won prizes for Professional Stage (Financial Accounting and Reporting, Tax, Financial Management, Audit, Business Strategy) and Case Study prize (highest score in the world). Kieran has been tutoring ACA subjects for several years and his student pass rate is considerably higher than other tutors. Kieran’s tuition is based around the learning techniques and exam strategies which enabled him to win prizes for all the subjects which he teaches.


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