The CII J03 October 2017 Exam in Review

This week we’re looking at the CII J03 October 2017 exam, the tax and legal aspects of business. This will be of interest to you if you’re planning to sit J03 in April.

The October 2017 Exam Paper

You can find a copy here.

Two hours are given to answer 15 short-answer questions for a total of 130 marks, and as is often the case, the exam started with a test of knowledge on partnerships –  this time on dissolving one and how assets would be distributed.

Question 2 was on company voluntary arrangements (CVA), which may have caused a few to scratch their heads only to be relieved again when the next area covered business relief.

The test of employment law included redundancy; a bit of theory and a calculation.

We then returned to familiar territory of a sole trader; tax-related responsibilities, key risks and how they could mitigate those key risks.

Question 6 tested the pros and cons of invoice factoring, which is perhaps something not overly tested in the past.

Financial ratios, more often seen in AF2, were then covered and specifically, how the quick ratio differs from the working capital ratio in relation to cash flow.

Question 8 was quite detailed for a J03 exam, but it drilled down to a calculation of a pension contribution, the criteria for the business to receive tax relief and the conditions that would need to be met should a loan be made to the company if a SSAS was established.

Question 9 tested alphabet shares (different!) and the advantages a preference share has over an ordinary share; this has been tested before so should have caused no problems.

Into the last third of the exam, and question 10 was another calculation, this time working out a high earner’s personal allowance, how much income tax could be saved by making a pension contribution and finally part (c) was to explain how a personal pension contribution differs from salary sacrifice in terms of reducing NI.

The exam then finished with testing knowledge on flexible working arrangements, key person insurance and shareholder protection and auto enrolment, which should have been fine as a key part of this syllabus and finally the criteria for a close company and the conditions that must be met for loan interest to qualify for income tax relief.

The April 2017 Exam Paper

Let’s compare this with the one from April 2017, which you can find here.

The April exam also began with testing basic knowledge on partnerships and continued with IVAs, a net present value calculation and dividend rights of different types of preference share; so similar topics that also appeared in the October exam.

The exam also featured, amongst other things, share incentive plans, a NIC calculation, a chargeable gains calculation for a limited company, followed by another calculation on paying a shareholding director a dividend or a bonus.  The annual investment allowance formed the latter part of the exam, plus business relief for IHT, maternity leave, relevant life policies and finally a nice question on auto enrolment and the implications on enhanced protection.

It does seem to us that the J03 paper is a fair one, yet the pass rate is one of the lowest; the manual is a monster to get through, but a well-prepared candidate will not come across areas that don’t feature in the book. Studying cannot be left to the last minute with J03 – it’s just too much information to cram into a short space of time, so candidates must prepare a study plan at least 12 weeks in advance of the exam to ensure that all of the chapters are covered in enough detail.  It goes without saying that past papers must be studied as well.

Grab the resources you need!

If you’re studying for your CII J03 exam, and you’re feeling anxious about exam day, 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!