The CII J03 June 2021 Exam in Review

This time, we’re looking at the J03 exam from the June 2021 sitting – this is the exam that covers the tax and legal aspects of business.

You can find a copy here.

Candidates are given two hours to answer 15 short-answer questions for a total of 130 marks.

Question 1

The first question should have been a nice start for candidates; it tested the four types of business insurance a sole trader should consider putting in place. This has been tested many times before and should have been a relatively easy eight marks.

Question 2

Onto Question 2, and this tested the impact of retirement where there is no partnership agreement in place. Again, this is a topic regularly tested in the exam and should have been no surprise to those using old exam guides to help with revision.

Question 3

Limited liability partnerships were next to be tested: firstly, the requirements to set one up for four marks and then the additional responsibilities of designated members of an LLP for six marks.

Question 4

Next came a question on the advantages and disadvantages to a company of raising capital via a share issue and a debenture issue – this question was for eight marks and may have caused difficulties for some.

Question 5

Next came a question on Voluntary Administration. Firstly, candidates had to explain the advantages for the company of entering Voluntary Administration, next state the aims of the Administrator, and finally, explain how Administration comes to an end. The question as a whole gave 10 marks and as bankruptcy/administration is another topic often tested, candidates should have picked up most of the available marks.

Question 6

This question could have caused difficulties as the topic, although covered in the J03 manual, has not been well answered in past exams. For three marks, candidates had to explain what is meant by the term budgetary control and for another four marks, outline the requirements for effective budgetary control.

Question 7

This question tested working capital: firstly, the definition was required (not the formula) and secondly four methods a business could use to improve its working capital.

Question 8

Self-employed tax is another area not always answered well – although not only by J03 candidates but also from some of the other written papers that cover this topic. This question asked for the advantages and disadvantages of choosing an accounting date of firstly, the 30 April and secondly, the 31 March. In total, the question gave 10 marks.

Question 9

This question moved onto limited companies and Corporation Tax (CT) liabilities. The questions were: state when CT must be paid by (for three marks), state when they must submit their tax return to HMRC (for another three marks), and finally for seven marks, explain the penalties if they do not inform HMRC within the relevant timescale. The third part of this question was difficult and again, is an area not always answered well across many of the written CII papers.

Question 10

Onto the last third of the paper, and Question 10 tested VAT: firstly, how the application of VAT to exempt and zero-rated supplies differ, for five marks. Then candidates had to list two exempt and two zero-rated supplies, and finally, explain the circumstances where a business is not eligible to join the flatrate scheme. All in all, 14 marks were available for this question, and some of those marks were difficult.

Question 11

The first calculation was on IHT and the application of the residence nil rate band; it seemed straightforward for six marks so we hope that most candidates would have done well.

Question 12

Next the question from the employment chapter – this time for seven marks, candidates had to explain the implied duties of a contract of employment for an employer and employee. This may have been challenging unless this particular section had been revised.

Question 13

A question on business protection came next: firstly, the two main methods used for calculating the level of cover in key person insurance. This was an easy two marks. Then candidates had to list a benefit and a drawback for each of those methods and finally, state four factors to consider when working out the level of cover for key person insurance. All in all, these should have been relatively easy marks.

Question 14

The exam continued with business protection and the area of automatic accrual for partnerships, which in the past, is not a topic that has been answered well. The question gave six marks for stating two benefits of automatic accrual and four drawbacks.

Question 15

Finally, candidates had to state the key requirements for a pension scheme to qualify as an auto-enrolment scheme; this was for five marks and for another five marks, the key tasks were required for a new company to prepare for automatic enrolment.

Overall, the exam paper gave its usual mixture of easy questions and not so easy questions. The J03 manual is one of the largest of the study material, and the examiners can pick from any part within the syllabus. With the last exam sitting of J03 taking place in the autumn, it will be interesting to see what will make up this last paper.

Comparison with the March 2021 Exam Paper

If we look at what was tested in March 2021’s paper, we can see if there has been any overlap. This question paper can be found here.

• What do to when starting a business from home
• Capital contributions and loans to a partnership set up under the Partnership Act
• Tort liability within an ordinary partnership and an LLP
• When a company director can be automatically disqualified
• Interpreting company accounts
• Alphabet shares
• Guarantor for a loan to a sole trader
• SAYE schemes
• NICs calculation
• Buying back shares in a private limited company
• Capital allowances
• TUPE
• Market valuation on private limited company shares
• Key person protection
• Flexi-access drawdown

Similar topics are tested at each session, and candidates sitting the final exam late this year should ensure they use as many past papers as they can as the same topics do come up again and again

Grab the resources you need!

If you’re studying for your CII J03 exam, and you’re feeling anxious about your re-sit, grab our free taster to try out one of Brand Financial Training’s mock exam papers for yourself.  Click the link to download the J03 mock exam taster now!