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How to obtain the skills marks in the ICAEW BPT exam

a student sat at a desk looking at a paper which appears to be an exam.

Academic Support tutor, Hywel Smith, has provided some tips and guidance on how to pass your ICAEW BPT exam and gain those important skills marks.

The two tax papers for the ICAEW Professional level are very different. Whereas the Tax Compliance (TC) exam is mainly computational and focuses on technical knowledge, in the Business Planning: Taxation (BPT) exam, less than half of the marks are available for technical knowledge and up to 75% of the marks are available for technical “skills.”

So, what are some of these key technical skills and how do we earn the marks available for them? The ICAEW break them down into four different areas, although there is some overlap with some of the skills falling into more than one area.

Assimilating and using information

Skills under this heading include:

Spotting key issues and risks. The BPT exam has been described as being about ‘spotting elephants and not mice,’ i.e. avoiding getting too bogged down in detailed calculations or minor issues and focusing on the issues which can potentially have a significant impact on tax liabilities and responsibilities of the client.

Following instructions. We need to make sure we are clear on who we are advising and use the information to do that. For example, if a company is being sold, is our client the buyer or the seller? There will be skill marks for sticking to the brief and avoiding making points that may be relevant to another party but not our client.

Identifying missing information and where further information is required. To replicate real-life scenarios you are often deliberately given incomplete information in the exam. Skills marks can be gained by spotting where this is the case, making sensible assumptions (see below) and stating that we need to check or get further information.

Structuring problems and solutions

Skills under this heading include:

Considering the Interaction of different taxes. Whilst in the TC exam different taxes are normally looked at in isolation, in the BPT exam we are usually considering the impact of a transaction on a range of taxes at the same time.

For example, if someone is thinking of giving away assets, there will be potential IHT and CGT implications. And whereas the advice might be different if we look at either tax in isolation, we need to consider both taxes and look at the overall picture.

Considering the impact of delaying or modifying future decisions. For example, considering whether a transfer should be made via a lifetime gift or waiting until death, or considering the timing of the appointment of a liquidator in conjunction with the winding up of a company.

Applying judgement

Skills under this heading include:

Showing scepticism towards the information in the question. We shouldn’t automatically assume that the information that we have been given is completely accurate. There are sometimes red flags in the question that the source of the information is not reliable, especially with regard to the ethics parts of the question. Picking up on this and stating that we should double-check some of the information will pick us up skills marks

Making sensible assumptions. In general, and following on from the points above about missing and questionable information, we will pick up skill marks for using sensible assumptions.

For example:

  • The taxpayer has/has not used their annual exemptions (CGT &/or IHT), nil rate band, BADR lifetime limit etc.
  • Our client has no other income
  • Tax rates will stay at similar levels in the future.

Time management. The BPT exam is a very time-pressured paper with lots of information to digest. The total marks for a question are not broken down for each sub-question requirement, leaving learners often unsure of how much time to spend on each part. Skills marks are available for applying judgement to determine this by using the amount of information provided for each requirement as a guide to the weighting of the marks available. You should use short punchy sentences to get your points down as succinctly as possible, and you should avoid getting bogged down in calculations or in one area, accepting that there may not be enough time to cover every single issue raised in the scenario.

Concluding, recommending and communicating

Skills marks under this heading include:

Making recommendations and drawing conclusions. In the BPT exam, we are giving advice, so there will be skills marks for making recommendations and drawing conclusions based on the work that we have done, even if what we have done is incorrect or contains some errors.

There are also marks available for explaining the limitations of conclusions or recommendations (e.g. due to incomplete information, there is future uncertainty over tax rates), and presenting a justification for a specific recommended action (e.g. better for cash flow).

Being specific to the scenario. Skills marks are earned for being specific to the scenario and referring to the precise circumstances of the client given rather than talking in general terms.

So, in conclusion, if you can try and get as much of the above into your answer as possible then you should be able to pick up lots of these crucial skills marks and be well on your way to passing the BPT exam.

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