The CII J03 October 2019 Exam in Review

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

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

This question tested the effect of bankruptcy on a partnership where a partnership agreement is not in place and where one is in place.  This might have been a challenging start for some candidates although tested before.

Question 2

This question asked for the advantages and disadvantages of setting up a business as a sole trader.   This should have been a nice question, as again, this has been tested in previous exam sittings.

Question 3

Next, candidates had to explain the similarities and differences between LLPs and limited companies.  The total question was for 10 marks so it may have been difficult to score well here for some.

Question 4

This was a small four-mark question on the legal obligations of auditors.

Question 5

This question required a couple of calculations on two companies’ profitability and then candidates were asked to state which would be the most attractive investment for an adviser.  This type of question is common in J03 so hopefully, candidates would have been prepared.

Question 6

This question asked for a description of personal security and real security for a total of eight marks.

Question 7

This question tested how interest on a loan would be treated for tax purposes for someone buying 10% of the shares in a company.  This was for five marks and would have meant candidates understanding the specific income tax relief rules.

Question 8

This question tested the IR35 rules: firstly, the circumstances the rules are designed to prevent; and secondly, the tests used to determine if someone is subject to them.  Overall, there were eight marks on offer.  Part (a) should have been straightforward enough with part (b) perhaps causing a few problems.

Question 9

Next, VAT was tested with a three-part question: firstly, when a small business should register;  secondly, the special schemes a small business can use; and finally, four examples of exempt supplies which would have included things like financial services, education etc.

Question 10

This was another calculation – this time, CGT for someone selling a business.

Question 11

This question covered the chapter on employment law; there is generally a question on this chapter, and in this exam, candidates were asked to state items of information that should be recorded as part of a written statement to an employee. There was a second part, which asked for circumstances when a contract of employment can be changed.  This may have been a hard question; the chapter is long and contains a lot of information that candidates may not come across often, making it difficult to retain.

Question 12

This question was on cash budgets and business planning – an area that may not have been overly tested in the past.

Question 13

This question tested business LPAs and wills – another topic that may not have been tested in the past, which may have been challenging.

Question 14

This question tested business protection, and candidates should have been fully prepared, as there will always be a question on some aspect of this. This time, it was the type of insurance that can be taken out and an explanation of cross option agreements. This should have been a question where candidates scored well.

Question 15

The last question covered salary sacrifice – both the benefits and the drawbacks and we hope, a nice end to this paper.

Comparison with the April 2019 Exam Paper

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

The topics covered were:

• Types of insurance a sole trader can put in place to reduce business risk
• How a partnership can be created under the Partnership Act 1890
• Documents needed for a company to incorporate and the process
• Role and duties of directors and role and rights of shareholders
• Conditions that must be met to avoid an audit
• Main statements an auditor’s report usually contains
• Fixed charges and floating charges
• How expenditure when setting up a sole-trader business is treated for tax purposes
• Calculation of profits charged to income tax in different tax years
• NICs calculation for an employee and employer
• Capital allowance calculations
• Redundancy consultation process
• Qualifying conditions for Statutory Paternity Pay
• Financial implications to a company should a key employee become ill
• Criteria for premiums on a key person policy to be tax-deductible
• How shareholder protection should be set-up
• Calculation for a SIPP buying a property
• Main tax advantages of a SIPP buying property compared to client buying it

Overall, the October paper seemed fair with a couple of new areas being tested but plenty of topics that have come up in past papers.  It is essential, therefore, to look at exam guides to get a general feel of topics tested and the style of questions asked.  It is a large syllabus, but similar themes do come up, so it is definitely worth spending some time putting in place a study schedule that covers all the learning outcomes.

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!