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Change is never easy. Think back to your first few days at school. What a nightmare — you don't know anyone, you don't know where anything is and, what's more, you don't really want to. But hey, after a few days, you're there. Everything is familiar and normal.
How is the CTA exam like that? Well, think about it. The Chartered Institute of Taxation's CTA qualification is a highly respected, demanding and rigorous professional exam. So why change it?
Essentially, the reason was to bring it up to date and make it relevant for today's tax professionals. Back in July 2005, the institute's council agreed that an in-depth review of the CTA exam structure should be carried out and that the exam syllabus would be reviewed.
The high standard of the CTA qualification had to be maintained, so the working party, chaired by John Beattie, a past president of the CIOT, faced a challenge.
Above all, the working party wanted to keep the gold standard, but it had to be up to date and fit in with today's tax professionals' lives. So it consulted with all groups who had an interest in the exam, i.e. employers, training bodies, students past and present, and found that certain consistent threads that ran through what these groups said fitted in with the working party's thoughts.
Structure
The pass rate has always been on the low side and this was a concern. While not a reason in itself to change the structure, it was something that needed to be addressed.
Then there was the phenomenal volume of material which candidates have to study in order to sit the exam. John felt that it was 'almost too much to ask from them, what with ever increasing changes, legislation which was becoming more and more complex, the syllabus was getting bigger and bigger, with nothing falling off at the other end'.
Candidates had to learn about aspects of tax legislation which they would probably only come across once or twice in their career. Thus, it was important to review the syllabus.
In order to do this, the working party had to go through the legislation, a very long and laborious job. But, as a result, decisions were made about which parts of the legislation should not be examined.
It is also important to remember that, increasingly, tax professionals specialise these days. So what was the point in having an exam that makes all students learn all the syllabus in depth? The working party therefore concluded that a modular structure was the answer: candidates can decide when to sit the papers and what subjects they wanted to be examined on in depth.
Better time management
A modular system will allow 'people to manage their study time better', says John. 'If you have a certain number of hours' study time, and you can channel it into, say, two subjects, you will do much better than if you have to split your time because you need to sit all four papers in one attempt'.
This is more efficient use of time and as a result the candidate's level of knowledge will be better. It is different for students in the large practices, where they get plenty of study assistance. For someone working in a local firm it is different, and the institute wants to cater for all professionals.
It is also true that students are not used to sitting four exams in two days — today's style of examinations tend to be more modular.
Breadth and depth
Whatever the new structure was, it had to examine breadth and depth. Even though many professionals do specialise, they have to know at least some degree of what other taxes entail so they can recognise a problem, even if they cannot solve it.
So the working party came up with the concept of advisory papers. These will be specialist papers and examine the candidate's depth of knowledge. The candidate chooses two specialist papers out of six. The aim, says John, is 'to let candidates choose papers which were more in tune with their professional work'.
The papers have been organised in a way that the working party believes will suit most candidates, i.e. three in the morning and three in the afternoon:
Morning session
- Taxation of owner-managed businesses
- VAT on UK domestic transactions (including SDLT)
- Inheritance tax, trusts and estates
Afternoon session
- Taxation of individuals
- VAT on cross border transactions and other indirect taxes
- Advanced corporation tax.
So, if a candidate chooses to do the VAT on UK domestic transactions paper, which is done in the morning, he can also do the other VAT paper, i.e. VAT on cross-border transactions and other indirect taxes, which takes place in the afternoon.
The choice of which papers they take is entirely up to the candidates, but depending on their choice, they may not be able to do them in one sitting.
Candidates will be allowed to sit one paper in one sitting if they choose, or do all the papers in one hit. But if two advisory papers are in the same group, the candidate will have to do them across two sittings.
Then there are the awareness papers which take place on the second morning. These comprise 12 short questions, each worth five marks, with five minutes for each question and must be on different subjects from the candidate's advisory papers.
The modules available are:
- taxation of individuals
- taxation of unincorporated businesses
- corporation tax
- inheritance tax, trusts and estates
- VAT including stamp taxes
The case study
The fourth exam is the application and interaction paper which brings everything together. The idea, says John 'is to replicate something you might come up against in the office'. A crucial difference between this and the old structure is the timing.
Taking into account that people work at a different pace, the working party felt that it is wrong to make the paper time pressured.
So candidates will have up to two and three hours to complete it, with the quality of the answer being paramount. The examiners will be looking for something that could be given to the client, so presentation will be important, rather than just an outpouring of everything that the candidate knows on the subject.
E-assessments
In addition, candidates will have to pass two one-hour e-assessment papers in professional responsibilities and ethics, and law.
These papers must be sat and passed before candidates sit the last tax paper. The papers will be a mixture of multiple choice and multiple reasoning at a level to show a good knowledge.
All the candidate will have to do, once registered with the CIOT, is to apply online to sit the paper. He will know the result immediately after sitting the paper, and if he fails, he does not have to wait six months to re-sit it; he can do it whenever he wishes.
Attractive structure
John is 'very confident that the new structure is attractive'. He hopes that the pass rate will increase, because students will be more prepared going into the exam. They will not have had to spend hours and hours studying subjects in depth which they may never look at again after the exam.
They will be able to organise their studying more effectively, they will be able to choose their subjects and, within certain time limits, choose when they want to sit the exam.
The credit system introduced in 2006 will continue. However, once a candidate has passed a paper, that credit will not be open-ended. He will have to pass all the exams within three years.
This seems a realistic time limit, says John, as it will 'not dilute the qualification and what the candidates passed on day one would, as much as it could be, still be relevant in three years' time'.
This should also give people the opportunity to plan their studying the way they want to.
Exemptions
Members of some other professional bodies were entitled to an exemption in certain papers under the old structure. These worked well, says John, but exemptions do not fit in quite so easily in the new structure.
However, it was necessary to take account of the candidate's primary qualification, e.g. ACA, so it was decided to give credits, rather than exemptions.
The problem was where to give the credit. If the aim of the CTA is to provide 'breadth and depth', the credit could not be given in the advisory or awareness papers.
In the end, it was agreed to give members of accountancy bodies a credit in the case study paper. All accountancy exams have a case study in them, so candidates have proved that they can apply knowledge in a certain way. John says that ultimately, 'this seemed the logical place to give the credit'.
Some credits will be available for the advisory papers. For example, IIT members and fully trained inspectors of taxes will be exempt from two advisory papers. They will all still have to do the awareness and case study papers.
The credits will last for a further five sittings from the date when the credit is awarded.
There are, in addition, transitional arrangements which will transfer any credit in respect of papers the candidate has passed under the current structure.
Overall, John is very positive about the new structure. He believes that it is innovative and meets the needs of today's tax professionals.
Full details of the new examination structure can be found on the CIOT's dedicated web page.
