Certificate in Finance, Accounting

and Business (ICAEW CFAB)

Syllabus and technical knowledge

grids

PRINCIPLES OF TAXATION

For exams in 2019

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CONTENTS

ICAEW CFAB OVERVIEW…………………………………………………………………………….. 3

PRINCIPLES OF TAXATION..……..……………………………………………………………..…... 5

TECHNICAL KNOWLEDGE GRIDS………………………………………………….………………. 9

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ICAEW CFAB overview

The ICAEW Certificate in Finance, Accounting and Business (ICAEW CFAB) is an internationally
recognised qualification – providing the practical skills and knowledge needed for today’s
competitive business world.

ICAEW CFAB consists of the same six exams as the first level of our world-leading chartered
accountancy qualification, the ACA, which includes:

Accounting
Assurance
Business, Technology and Finance
Law
Management Information
Principles of Taxation

ICAEW CFAB is a standalone qualification, it also forms part of our Level 4 Professional
Accounting Technician Apprenticeship.

Assessment
Each exam module is examined by a 1.5 hour computer-based exam, and can be sat throughout
the year at an ICAEW approved text centre (subject to exam centre availability). The pass mark for
each exam is 55%. Students have a maximum of four attempts at each exam.

Ethics
Ethics is embedded throughout the qualification and there are specific learning outcomes included
in a number of the exam modules. The syllabus has been designed to ensure students understand
the fundamental principles of ethics, can apply relevant ethical guidance and are able to
recommend actions to resolve ethical issues.

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Credit for prior learning
Students who are studying for, or already hold a degree with components of business, law or
finance may be eligible for exam credit against some of the ICAEW CFAB exam modules. Please
visit icaew.com/cfabcpl for further information. The Accounting module is mandatory for all
students.

Syllabus
This document presents the learning outcomes for each of the ICAEW CFAB exams. The learning
outcomes in each exam should be read in conjunction with the relevant technical knowledge grid at
the end of this document.

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Principles of Taxation
MODULE AIM
To enable students to understand the general objectives of taxation and to calculate income tax,
national insurance contributions, capital gains tax, corporation tax and VAT in straightforward
scenarios.

On completion of this module, students will be able to:

 explain the general objectives of taxation, the influences upon the UK system of taxation, the
different types of tax in the UK;
 recognise the ethical issues arising in the course of performing tax work;
 identify the obligations the UK system of taxation imposes on taxpayers and the implications of
non-compliance;
 calculate the amount of income tax owed by or owed to individuals and the amount of national
insurance payable;
 calculate the amount of capital gains tax payable by individuals and the chargeable gains
subject to corporation tax;
 calculate the amount of corporation tax payable by companies; and
 calculate the amount of VAT owed by or owed to businesses.

METHOD OF ASSESSMENT
The Principles of Taxation module is assessed by a 1.5 hour computer-based exam. 20% of the
marks are allocated to two scenario-based questions. These will each cover a single syllabus area:
income tax and NIC, and corporation tax. The remaining 80% of the marks are from 40 multiple
choice, multi-part multiple choice, multiple response or numeric entry questions. These questions
will cover the remaining areas of the syllabus in accordance with the weightings set out in the
specification grid.

The tax tables included in the ICAEW learning materials are provided to students on-screen in the
exam.

SPECIFICATION GRID
This grid shows the relative weightings of subjects within this module and should guide the relative
study time spent on each. In each assessment, the marks available will equate to the weightings
below.

Syllabus area Weighting (%)

1 Objectives, types of tax and ethics 10
2 Administration of taxation 20
3 Income tax and national insurance contributions 26
4 Capital gains tax and chargeable gains for companies 10
5 Corporation tax 14
6 VAT 20

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The following learning outcomes should be read in conjunction with the relevant sections of the
technical knowledge grids at the end of this document.

1 Objectives, types of tax and ethics

Students will be able to explain the general objectives of taxation, the influences upon the UK
system of taxation, the different types of tax in the UK, and will be able to recognise the ethical
issues arising in the course of performing tax work.

In the assessment, students may be required to:

a. identify the objectives of digitisation of tax;
b. identify the objectives of taxation in general terms of economic, social justice and
environmental issues, the range of tax opportunities open to the government and the relative
advantages of different types of tax in meeting the government’s objectives;
c. recognise the impact of relevant external influences on UK tax objectives and policies;
d. classify entities as individuals, partnerships, or companies for tax purposes and state how they
are taxed;
e. identify who is liable for the following taxes, how the taxes apply to income and transactions,
identify the government bodies responsible for the taxes, and determine when an individual or
entity comes within the scope of the taxes:
 capital gains tax
 corporation tax
 income tax
 national insurance
 VAT;
f. recognise the importance of the budget cycle, tax year and the following sources of UK tax law
and practice:
 legislation
 case law
 HMRC manuals, statements of practice, extra-statutory concessions and press releases;
g. identify the five fundamental principles given in the IESBA Code of Ethics for Professional
Accountants and ICAEW Code of Ethics, and the guidance in relation to a tax practice with
regard to:
 the threats and safeguards framework
 ethical conflict resolution; and
h. identify the following:
 conflicts of interest
 money laundering
 tax avoidance and tax evasion.

2 Administration of taxation
Students will be able to identify the obligations the UK system of taxation imposes on taxpayers
and the implications for taxpayers of non-compliance.

In the assessment, students may be required to:

a. identify the records which companies and individuals must retain for tax purposes and state
the periods for which the records must be retained;
b. identify the key features of the PAYE and national insurance system and calculate PAYE tax
codes for employees;
c. identify the key features of the self-assessment system for both companies and individuals;
d. determine, in straightforward cases, due dates for:
 companies’, sole traders’, partnerships’ and individuals’ tax returns, tax payments and
payments on account

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  businesses’ VAT returns and payments
 employers’ PAYE and national insurance returns and payments;
e. identify and calculate the interest and penalties due for:
 late submissions of and/or incorrect returns, and
 late and/or incorrect payments of tax;
f. identify the periods within which HMRC can enquire into a taxpayer’s returns or other
information and tax liabilities and recognise the taxpayer’s right of appeal and the process for
dealing with disputes.

3 Income tax and national insurance contributions

Students will be able to calculate the amount of income tax owed by or owed to individuals and the
amount of national insurance payable.

In the assessment, students may be required to:

a. recognise the main sources of taxable and non-taxable income;
b. calculate the personal allowance available to an individual according to personal
circumstances including married couples allowance and marriage allowance;
c. calculate assessable employment income for an employee or director, including taxable and
exempt benefits;
d. recognise the badges of trade;
e. allocate given items of business expenditure as allowable or disallowable for tax purposes and
calculate the adjusted trading profits after capital allowances on plant and machinery of a sole
trader or partnership using either the accruals basis or cash basis of accounting;
f. allocate the tax adjusted profits of a partnership to each partner and calculate the tax
assessable profits for each partner for any given tax year;
g. calculate the assessable trading profits for a new unincorporated business and identify the
overlap profits on the commencement of trade;
h. calculate the assessable trading profits for a continuing business;
i. calculate the final assessable trading profits for an unincorporated business ceasing to trade;
j. calculate total taxable income and the income tax payable or repayable for individuals; and
k. calculate the total national insurance contributions payable by employees, employers and self-
employed individuals.

4 Capital gains tax and chargeable gains for companies

Students will be able to calculate the amount of capital gains tax payable by individuals and the
chargeable gains subject to corporation tax.

In the assessment, students may be required to:

a. classify persons, assets and disposals as either chargeable or exempt for capital gains
purposes;
b. calculate the chargeable gains and losses on the disposal of assets, including indexation
where appropriate;
c. calculate total taxable gains for both individuals and companies; and
d. calculate the capital gains tax payable by individuals.

5 Corporation tax
Students will be able to calculate the amount of corporation tax payable by companies.

In the assessment, students may be required to:

a. identify accounting periods for a company;
b. recognise the interaction of having one or more related 51% group companies with corporation
tax payment dates;

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c. allocate given items of business expenditure as allowable or disallowable for tax purposes and
calculate the adjusted trading profits after capital allowances on plant and machinery; and
d. calculate the taxable total profits and the corporation tax payable for a company resident in the
UK which has a period of account of 12 months or less.

6 VAT
Students will be able to calculate the amount of VAT owed by or owed to businesses.

In the assessment, students may be required to:

a. classify supplies in given straightforward situations as exempt, zero-rated, standard-rated,
subject to a reduced rate of 5%, or outside the scope of VAT;
b. recognise the implications of supplies being classified as reduced-rated, standard-rated, zero-
rated or exempt;
c. identify when a business could or should register or deregister for VAT and state the time
limits;
d. determine the tax point for a supply of goods or services;
e. state the principles of VAT payable or repayable on the supply of goods or services by a
taxable person and calculate the monthly, quarterly or annual VAT payable or repayable by a
business; and
f. state the alternative schemes for payment of VAT by businesses and calculate the VAT
payable or repayable for a business using these.

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Technical knowledge
The tables contained in this section show the technical knowledge in the disciplines of financial
reporting, audit and assurance, business analysis, ethics and taxation covered in the ACA syllabus
by module.

For each individual standard the level of knowledge required in the relevant Certificate and
Professional Level module and at the Advanced Level is shown.

The knowledge levels are defined as follows:

Level D
An awareness of the scope of the standard.

Level C
A general knowledge with a basic understanding of the subject matter and training in its application
thereof sufficient to identify significant issues and evaluate their potential implications or impact.

Level B
A working knowledge with a broad understanding of the subject matter and a level of experience in
the application thereof sufficient to apply the subject matter in straightforward circumstances.

Level A
A thorough knowledge with a solid understanding of the subject matter and experience in the
application thereof sufficient to exercise reasonable professional judgement in the application of
the subject matter in those circumstances generally encountered by chartered accountants.

Key to other symbols:

→ The knowledge level reached is assumed to be continued

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Ethics Codes and Standards
Ethics Codes and Standards Level Modules
IESBA Code of Ethics for Professional Accountants Certificate Level
(parts A, B and C and Definitions) C/D Accounting
B Assurance
ICAEW Code of Ethics C/D Business, Technology and Finance
D Law
C Management Information
C Principles of Taxation

Professional Level
A Audit and Assurance
B Business Strategy and Technology
B Financial Accounting and Reporting
B/C Financial Management
B Tax Compliance
B Business Planning

Advanced Level
A Corporate Reporting
A Strategic Business Management
A Case Study

FRC Revised Ethical Standard (2016) B Assurance

A Audit and Assurance

Advanced Level
A Corporate Reporting
A Strategic Business Management
A Case Study

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