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At Extratax Training, we’re here to support you with guidance for your ADIT exam.

Each week in ADITextrathe blog for ADIT candidates – we offer you ADIT exam resources for the Principles of International Tax, Transfer Pricing, UK & US Tax modules. 

 

1. Transfer Pricing

The transfer pricing tuition classes ended last week and the students have now completed their mock exam. This weekend is the first of the intensive revision sessions, focussing on past paper questions. Jimmy Ryan is sharing his expertise on how to present knowledge to the examiner.

 

You can now book for the December 2021 Transfer Pricing course, with the benefit of an attractive early bird booking offer!

 

2. Principles of International Tax

It’s also intensive revision time for the Principles of International Taxation students. They are working through past paper questions with Jimmy, thinking about how to structure their answers to the essay questions in Part A and approach the scenario questions in Part B.

 

The individual feedback from the mock exam is an invaluable tool in improving their exam performance. If there is a time to fail, it’s in the mock exam. It is more important to attempt a mock than to pass it.

 

You’ll learn so much by sitting down under ADIT exam conditions for 3 hours & 15 minutes and completing a full past paper:

  • How much are you able to type in the allotted time?
  • Did you stick to the timings and complete all of the questions?
  • How did you feel in the last hour of the exam versus the first hour?
  • How did you choose which questions to answer?
  • With hindsight, did you choose the best ones for you?
  • Did you panic when you encountered something unfamiliar in a question?
  • How do your answers compare to the suggested solutions?

 

Particularly if you are sitting your first ADIT exam, the exam day should not be your first experience of attempting a full paper. The best time to find out the answers to the questions above is in the weeks leading up to the exam, when you have time to learn from it and improve your exam technique.

 

You can now book for the December 2021 course for Principles of International Taxation, taking advantage of an attractive early bird booking offer!

 

 

3. UK Tax

Friday was the final tuition class for our UK Tax students. Catriona Loughran covered a range of topics from the Module 2.09 syllabus:

  • Globally mobile employees

  • Transfer of Assets Abroad anti-avoidance rules

  • Profit fragmentation anti-avoidance rules – newly introduced in 2019 so highly examinable

  • Stamp duty, including the new non-resident surcharge

  • VAT

  • Customs Duties

 

ADIT Exam – UK Tax

Interested in benefitting from our UK Tax expertise? Then sign up for our new online distance learning course, with introductory pricing available!

 

The online distance learning course for Module 2.09 includes:

  • Tutor support from Catriona – contact her directly from an app in the study materials

  • Mock exam with tailored feedback

 

 

If you’d like to benefit from our live classes, click here to find out about our online study course for the December 2021 exams.

 

4. US Tax

Robert Misey joined us as a guest lecturer on the US Tax course this week to share his expertise on US Transfer Pricing. Rob is a US tax attorney focusing on international taxation, M&A structures, transfer pricing strategies, and inbound and outbound planning for multinationals. He’s also an author of an essential reading book from the syllabus – Schadewald, M. and Misey, R. ‘Practical Guide to US Taxation of International Transactions’.

 

Catriona was delighted to introduce Rob to the US Tax students and join the class to learn from his knowledge. Rob used practical examples throughout the class to demonstrate the application of the US Transfer Pricing rules. Undoubtedly, he would win the award for most inventive use of hockey pucks in a transfer pricing discussion!

 

Rob’s enthusiasm for transfer pricing shone through and we can’t wait to welcome him back to next week’s guest lecture on Cross-Border Merges & Acquisitions.

 

If you would like to express your interest in joining us for the next ADIT US Tax exam sitting for Module 2.10 in June 2022, please email us at info@extrataxtraining.com.

Follow us on social media to keep up to date with our ADIT blogs. And don’t be shy, please say hello and let us help you with your ADIT exam!

 

Stay Informed

Visit our ADITextra blog to find out what else we’ve covered this semester.

Visit our website
Contact us

Follow us on LinkedIn, Twitter & YouTube

 

 

At Extratax Training, we’re here to support you with guidance for your ADIT exams.

Each week in ADITextrathe blog for ADIT candidates – we discuss the topics covered in our online ADIT courses and share free video content. Find ADIT exam resources for Principles of International Tax, Transfer Pricing, UK & US Tax classes. 

Read on to find out about the topics covered in this week’s online classes. The spotlight is on Principles of International Taxation and you can watch a discussion on Thin Capitalisation. If you missed any earlier editions of ADITextra, you’ll find them here.

 

1. Transfer Pricing

In the final transfer pricing tuition class of the semester, James (Jimmy) Ryan discussed:

  • E-commerce

  • Public Affairs 

  • Business Decisions

  • Management Incentives

  • Customs Duties

 

Having completed the tuition element of the course, our students are now sitting their mock exam. The feedback and guidance from Jimmy on their mock exam papers will be invaluable.

 

You can now book for the December 2021 Transfer Pricing course, with the benefit of an attractive early bird booking offer!

 

2. Principles of International Tax

Wednesday saw the final Principles of International Taxation tuition class, with Jimmy looking at:

  • Thin Capitalisation

  • Taxation and International Human Rights Instruments

  • Indirect Taxes and International Taxation

  • Cross-Border Mergers

 

You can watch part of the discussion on Thin Cap in the Spotlight section below.

 

It’s also mock exam time for the Principles of International Taxation students. If you regularly read this blog, you’ll know how often we stress the importance of attempting past paper questions. At this stage, you should be working on them under exam conditions, sticking to the time you’ll have in the exam. You should type all of your answers to get a realistic idea of how much you can write in the time allowed.

 

You can now book for the December 2021 course for Principles of International Taxation, taking advantage of an attractive early bird booking offer!

 

 

3. UK Tax

On Thursday, we had a guest lecturer to share her expertise of Inheritance Tax (IHT) and trusts, including offshore trusts. This is a complex area, particularly challenging if your background is in corporate tax or you’re unfamiliar with the UK tax system.

 

To successfully answer a question on this topic in your exam, you should know the answers to these questions:

  • What is IHT and when does it apply?

  • How does domicile and deemed domicile status impact on UK IHT?

  • What is the spousal exemption, and how does it apply where one party is UK domiciled and the other is non-dom?

  • How do the Gifts with Reservation of Benefits rules operate?

  • What are the tax implications on setting up, running and making distributions from a trust?

  • What happens if a trust is ‘settlor-interested’?

  • How relevant anti-avoidance provisions, e.g. transfer of asses abroad, apply?

  • What are the benefits of offshore trusts?

 

ADIT Guidance – UK Tax

Interested in benefitting from our UK Tax expertise? Then sign up for our new online distance learning course, with introductory pricing available!

 

The online distance learning course for Module 2.09 includes:

  • Tutor support from Catriona – contact her directly from an app in the study materials

  • Mock exam with tailored feedback

 

 

If you’d like to benefit from our live classes, click here to find out about our online study course for the December 2021 exams.

 

4. US Tax

Ishali Patel returned on Thursday for the US Tax course looking at:

  • Federal Estate Tax:

    • Domicile of individuals

    • Situs of assets

    • Transfers to non-resident alien beneficiaries

    • Relief of double taxation: estate tax treaties

  • Federal Gift Tax:

    • US persons and non-resident aliens

    • Situs of assets for gift tax purposes

    • Transfers to non-resident aliens

  • Foreign Trusts:

    • Grantor trust rules

    • Non-grantor trusts and accumulated income

       

We’re excited about Robert Misey joining us as a guest lecturer on the US Tax course for the next two weeks. Rob is a US tax attorney focusing on international taxation, M&A structures, transfer pricing strategies, and inbound and outbound planning for multinationals. He’s also an author of an essential reading book from the syllabus – Schadewald, M. and Misey, R. ‘Practical Guide to US Taxation of International Transactions’.

 

If you would like to express your interest in joining us for the next ADIT US Tax exam sitting for Module 2.10 in June 2022, please email us at info@extrataxtraining.com.

 

5. Spotlight on Thin Capitalisation

Each week, we put the spotlight on a topic covered in one of our classes and offer you ADIT guidance. This time, let’s look at Thin Capitalisation. The video was taken from this week’s Principles of International Taxation class, but it’s equally relevant for the Transfer Pricing paper.

 

Watch & Learn

Watch part of this week’s Principles of International Taxation course for an overview of  ‘Thin Capitalisation‘.

 

Follow us on social media to keep up to date with our ADIT blogs. And don’t be shy, please say hello and let us offer you our ADIT guidance!

 

Stay Informed

Visit our ADITextra blog to find out what else we’ve covered this semester.

Visit our website
Contact us

Follow us on LinkedIn, Twitter & YouTube

 

 

There’s not long to go until the June exams, so you should be getting ready to move into your revision phase and gathering your ADIT exam resources.

Each week in ADITextrathe blog for ADIT candidates – we discuss the topics covered in our online ADIT courses and share free video content. Find ADIT exam resources for Principles of International Tax, Transfer Pricing, UK & US Tax classes. 

Read on to find out about the topics covered in this week’s online classes. The spotlight is on Transfer Pricing and you can watch a discussion on Intangibles. If you missed any earlier editions of ADITextra, you’ll find them here.

 

1. Transfer Pricing

In Tuesday’s transfer pricing class, James (Jimmy) Ryan focussed on specific transactions, discussing intangible property and business restructuring.

 

Jimmy looked at the four sections in Chapter VI of the OECD Transfer Pricing Guidelines covering ‘Special Considerations for Intangibles’:

  • identifying intangibles (see the Spotlight section below)

  • ownership of intangibles and transactions involving the development, enhancement, maintenance, protection and exploitation (DEMPE) of intangibles

  • transactions involving the use or transfer of intangibles

  • supplemental guidance for determining the arm’s length conditions in cases involving intangibles

 

As part of preparing your ADIT exam resources, you should read through and highlight Chapter VI in the OECD TPG. You should also take note of the Annex to Chapter VI, which contains 29 examples illustrating the guidance on intangibles.

 

Jimmy moved on to Chapter IX of the Transfer Pricing Guidelines on Business Restructuring. He discussed typical business models implemented in a restructuring, the OECD’s approach to business restructuring and how tax authorities respond to business restructuring.

 

If you would like to express your interest in joining us for the December 2021 Transfer Pricing course, please use the contact form below or email info@extrataxtraining.com. We’ll shortly be launching the December 2021 courses with an attractive early bird booking offer!

 

2. Principles of International Tax

The Principles of International Taxation class spent last week & this week on Transfer Pricing, an important area of the Module 1 syllabus. Some of the students have already passed, or are currently studying for, the Transfer Pricing module so have no shortage of knowledge. If you are experienced in Transfer Pricing, the challenge for you in answering questions on the Principles of International Tax paper is understanding the level of detail required by the examiner. As always, two points are key:

  • Get to grips with what is required by attempting past paper questions under exam conditions and then comparing your answer to the suggested solutions.
  • Stick rigidly to your time allocation in the exam – don’t be tempted to spend longer on a question because you’re comfortable with the topic.

 

Other students on the Principles of International Tax course are new to Transfer Pricing, so Jimmy’s ability to explain the foundations is invaluable. If you missed it, check out his video on the Fundamentals of Transfer Pricing on our YouTube channel.

 

This week’s class covered:

  • Intangibles 

  • Cost Contribution Arrangements

  • Intra-Group Services

  • Business Restructuring

  • Transfer Pricing Documentation

 

You can watch part of the discussion on Special Considerations for Intangibles in the Spotlight section below.

 

If you are interested in joining us for the December 2021 course for Principles of International Taxation, please use the contact form below or email info@extrataxtraining.com. In early May, we will launch the December 2021 courses with an attractive early bird booking offer!

 

 

3. UK Tax

On Thursday, the UK Tax class looked at the remittance basis of taxation for UK resident but non-domiciled individuals. This is an important part of the Module 2.09 syllabus. When it comes to domicile and remittance, our ADIT students benefit from the expertise of James Heathcote, a Spear’s Top Recommended Tax & Trusts Accountant who authored the study materials on remittance. He uses his expertise to bring this complex topic to life with helpful illustrations.

 

To successfully answer a question on remittance to the UK in your exam, you should know the answers to these questions:

  • What is a remittance?

  • What are the exceptions?

  • What is a mixed fund?

  • What are the ordering rules for remittance from a mixed fund?

  • What was the opportunity for mixed fund cleansing?

 

ADIT Exam Resources – UK Tax

Interested in benefitting from our UK Tax expertise? Then sign up for our new online distance learning course, with introductory pricing available!

 

The online distance learning course for Module 2.09 includes:

  • Tutor support from Catriona – contact her directly from an app in the study materials

  • Mock exam with tailored feedback

 

 

4. US Tax

Ishali Patel returned on Thursday for the US Tax course looking at:

  • Foreign Account Tax & Compliance Act (FATCA)

  • Foreign Bank Account Reports & entity information reporting

  • Exchange of information

  • Co-operation between revenue authorities

 

We’re excited about Robert Misey joining us as a guest lecturer on the US Tax course later this semester. Robert is a US tax attorney focusing on international taxation, M&A structures, transfer pricing strategies, and inbound and outbound planning for multinationals. He’s also an author of an essential reading book from the syllabus – Schadewald, M. and Misey, R. ‘Practical Guide to US Taxation of International Transactions’.

 

If you would like to express your interest in joining us for the next ADIT US Tax exam sitting for Module 2.10 in June 2022, please use the contact form below or email info@extrataxtraining.com.

 

5. Spotlight on Transfer Pricing of Intangibles

Each week, we put the spotlight on a topic covered in one of our classes and offer you free ADIT exam resources. This time, let’s look at Transfer Pricing of Intangibles. The video was taken from this week’s Principles of International Taxation class, but it’s equally relevant for the Transfer Pricing paper.

 

Watch & Learn

Watch part of this week’s Principles of International Taxation course for an overview of  ‘Transfer Pricing of Intangibles‘.

 

Follow us on social media to keep up to date with our ADIT blogs. And don’t be shy, please say hello and let us welcome you to our ADIT community!

 

Stay Informed

Visit our ADITextra blog to find out what else we’ve covered this semester.

Visit our website
Contact us

Follow us on LinkedIn, Twitter & YouTube

 

 

With little over 7 weeks to go to the June exams, what is your ADIT study plan? If you don’t have one or haven’t been sticking to it, now is the time to re-focus and decide how you’ll go about achieving your ADIT goal.

Each week in ADITextrathe blog for ADIT candidates – we discuss the topics covered in our online ADIT courses and share free video content. Follow along with Principles of International Tax, Transfer Pricing, UK & US Tax as a guide for your ADIT study plan. 

Read on to find out about the topics covered in this week’s online classes. To mark the launch of our distance learning course, the spotlight is on UK Tax and you can watch a discussion on International Financing. If you missed any earlier editions of ADITextra, you’ll find them here.

 

1. Transfer Pricing

The transfer pricing class returned on Tuesday after a fortnight’s break. Well, we say break, but the students had been studying and sitting their first mock exam. With the limited time remaining before Thursday 10 June, you should be getting in the swing of attempting past paper questions. Here’s some great advice that James (Jimmy) Ryan gave his transfer students this week as he set a past paper for the weekly assignment:

 

As a minimum, I would like you at attempt question 8….but in truth, I would really like you to spend time, under exam time constraints, to answer more than 1 question. The time spent now attempting questions, putting yourself under pressure to answer these question under time constraints will expose you to what you are comfortable with and, more importantly, what you are not. You will learn much more quickly and effectively by submitting an answer that you are not happy with as you will be annoyed with yourself for not including some parts and it will be seared into your minds for the big day in June!

 

At this stage, the course has almost covered the full transfer pricing syllabus, with this week’s class looking at:

  • Transfer pricing documentation:

    • Local File

    • Master File

    • Country by Country Reporting

  • Safe Harbours

  • Dispute Resolution

    • Corresponding Adjustments

    • Mutual Agreement Procedure (MAP)

    • Arbitration

    • Advanced Pricing Agreements (APA)

 

Don’t forget to include these compliance areas in your ADIT study plan!

 

If you would like to express your interest in joining us for the December 2021 Transfer Pricing course, please use the contact form below or email info@extrataxtraining.com. We’ll shortly be launching the December 2021 courses with an attractive early bird booking offer!

 

2. Principles of International Tax

The Principles of International Taxation class also returned after an Easter break. Jimmy is spending this week & next on Transfer Pricing, an important area of the Module 1 syllabus. As you would probably guess, it’s one of his favourite topics and his enthusiasm for the subject shines through!

 

Transfer pricing is new to some of our Principles of International Tax students, so Jimmy’s ability to explain the foundations is invaluable. If you missed it, check out his video on the Fundamentals of Transfer Pricing on our YouTube channel.

 

This week’s class covered:

  • Introduction to Transfer Pricing

  • Article 9 of the OECD Model Tax Convention

  • OECD Transfer Pricing Guidelines

  • Advanced Pricing Agreements (APA)

  • Transfer Pricing Case Law, including:

    • DSG Retail v HMRC

    • GE Capital Canada v The Queen

    • SNF v Commissioner of Taxation

    • State Aid cases

 

When preparing your ADIT study plan, think about any tax cases that you will be expected to know. For some papers, the syllabus lists specific cases. However, for Principles of International Tax, the guidance on cases is more general:

 

The syllabus does not examine the rules of any one state. Decisions of the courts of many countries are therefore relevant to this subject. Leading cases are drawn from as far afield as New Zealand, South Africa, Canada, France and Germany.

Cases from the non-English speaking world are generally from the Bundesfinanzhof (German Federal Tax Court), the Conseil d’Etat (French Supreme Administrative Court) or the Hoge Raad (Netherlands Supreme Court). The more important cases are summarised in European Taxation or the Bulletin for International Taxation.

 

If you’re undertaking self-study, this puts the onus on you to compile a list of relevant cases and learn about them. Remember to keep up-to-date, as you’re expected to have knowledge of any court case reported up to six months before the exam. Plus there can be additional credit available for knowledge of more recent developments. A great way of staying updated is to sign up for the International Tax newsletter from MNE Tax.

 

If you are interested in joining us for the December 2021 course for Principles of International Taxation, please use the contact form below or email info@extrataxtraining.com. In early May, we will launch the December 2021 courses with an attractive early bird booking offer!

 

 

3. UK Tax

On Thursday, the UK Tax class looked at the final Corporate Tax topics on the syllabus, under the heading of ‘International Financing’. See the Spotlight section below to learn more.

 

Now that all the Corporate Tax topics have been covered, the students can throw themselves into practising past paper questions. Many of the exam questions cover more than one part of the syllabus, so it’s important to understand how the various pieces of legislation interact and – we can’t stress this enough – attempt questions under exam conditions.

 

ADIT UK Tax – Online Distance Learning Course

Interested in benefitting from our UK Tax expertise? Then sign up for our new online distance learning course, with introductory pricing available!

 

The online distance learning course for Module 2.09 includes:

  • Tutor support from Catriona – contact her directly from an app in the study materials

  • Mock exam with tailored feedback

 

 

4. US Tax

It is already Week 6 of our US Taxation course, with Ishali Patel returning on Thursday to discuss:

  • Foreign investment in US real property interests

  • The OECD and US Model tax treaties

  • Limitations of benefits provisions

  • Provisions relating to hybrid entities

 

The Limitation of Benefits (LOB) clause in US tax treaties is a challenge to understand. If you’re not familiar with it, give yourself enough time in your ADIT study plan to get to grips with it.

We’re very excited to announce that Robert Misey is joining us as a guest lecturer on the US Tax course later this semester. Robert is a US tax attorney focusing on international taxation, M&A structures, transfer pricing strategies, and inbound and outbound planning for multinationals. He’s also an author of an essential reading book from the syllabus – Schadewald, M. and Misey, R. ‘Practical Guide to US Taxation of International Transactions’.

 

If you would like to express your interest in joining us for the next ADIT US Tax exam sitting for Module 2.10 in June 2022, please use the contact form below or email info@extrataxtraining.com.

 

5. Spotlight on International Financing

Each week, we put the spotlight on a topic covered in one of our classes and offer you free ADIT content. This time, let’s look at UK provisions relating to International Financing.

 

If you get an exam question involving loans or other financing transactions, you should be thinking about the following areas of the UK syllabus:

  • Transfer pricing / thin capitalisation
  • Unallowable purpose under s441 & s442 CTA 2009
  • Reporting requirements for international movements of capital
  • Late paid interest
  • Corporate Interest Restriction (CIR)
  • Hybrid mismatch – although this legislation is wider than financing costs, and applies to any payments meeting the conditions.

 

You should check out the judgment in the Blackrock case for a discussion on transfer pricing of loans and unallowable purpose.

 

When looking at the Corporate Interest Restriction, remember that it is a mechanical test, working through a series of calculations. The main challenge in understanding it can be getting past the long list of acronyms used in the legislation & HMRC guidance. Don’t let them confuse you or put you off – ignore most of the names & focus on the principles. Take your time to work through the key steps, practising lots of questions of course!

 

Watch & Learn

Watch part of this week’s UK Tax course for an overview of  ‘International Financing‘.

 

Follow us on social media to keep up to date with our ADIT blogs. And don’t be shy, please say hello and let us welcome you to our ADIT community!

 

Stay Informed

Visit our ADITextra blog to find out what else we’ve covered this semester.

Visit our website
Contact us

Follow us on LinkedIn, Twitter & YouTube

 

 

Free ADIT content to help you pass your June 2021 exams. For easy access to all our free international tax content, subscribe to our YouTube channel

Each week in ADITextrathe blog for ADIT candidates – we discuss the topics covered in our online ADIT courses and share free video content from our live classes. Follow along with Principles of International Tax, Transfer Pricing, UK & US Tax to guide your self-study. 

Read on for a summary of our free ADIT content. In addition, watch our founder explain the new UK Digital Services Tax.

 

1. Transfer Pricing

While we’re taking a fortnight’s break from the live transfer pricing classes, take the opportunity to check out our free video content on key topics from the ADIT Transfer Pricing syllabus:

 

We’re no longer accepting bookings for this semester’s Transfer Pricing course. If you would like to express your interest in joining us for the December 2021 course, please use the contact form below or email info@extrataxtraining.com. We’ll shortly be launching the December 2021 courses with an attractive early bird booking offer!

 

2. Principles of International Tax

The Principles of International Taxation classes are also on an Easter break, with the students using the time to consolidate their knowledge and tackle their first mock exam. If you missed them in previous editions of ADITextra, watch free videos from the Principles of International Tax course discussing:

 

Controlled Foreign Company (CFC) anti-avoidance rules are part of the Principles of International Tax syllabus. You should have an awareness about the types of CFC legislation implemented by OECD states. So you should check out last week’s edition of ADITextra to watch an overview of the Controlled Foreign Company rules in the United States.

 

We’re no longer accepting bookings for this semester’s Principles of International Taxation course. If you would like to express your interest in joining us for the December 2021 course, please use the contact form below or email info@extrataxtraining.com. Soon, we will launch the December 2021 courses with an attractive early bird booking offer!

 

 

3. UK Tax

On Thursday, the UK tax course returned after a two week break. For the first hour, Catriona Loughran led the discussion on the UK’s Digital Services Tax – see the Spotlight section below for free content from the class.

 

Next, it was time to learn about a key topic from the ADIT UK syllabus – Controlled Foreign Company (CFC) rules. This is a popular area for an exam question. You should understand how the legislation works and be able to apply it to the scenario given in the question. Getting to grips with the UK CFC rules is not straightforward – the gateway tests can be confusing and you may find yourself lost in the complexities.

 

As always, don’t spend too much time reading about the topic. Once you think you understand it, start practising questions, working your way up to past paper questions. It’s the application of your knowledge that matters for the exam, so making yourself type out full answers to past paper questions is the best preparation!

 

UK Tax – Free ADIT Content

If you missed them in previous editions of ADITextra, watch free content from the United Kingdom Taxation course covering:

 

ADIT UK Tax – Online Distance Learning Course

Although we’re no longer accepting bookings for this semester’s UK Tax course, you can still benefit from our expertise by signing up for our new online distance learning course.

 

The online distance learning course for Module 2.09 includes:

  • Tutor support from Catriona – contact her directly from an app in the study materials
  • Mock exam with tailored feedback

 

 

4. US Tax

In Thursday’s US Taxation course, Ishali Patel shared her international tax expertise, discussing:

  • Related party financing of a US subsidiary: anti-earnings stripping rules & debt versus equity

  • Anti-conduit rules

  • Distributions from a US subsidiary

  • Investment in foreign partnerships and funds

  • Distributions from foreign subsidiaries

  • Corporate transfers to foreign subsidiaries

 

US Tax – Free ADIT Content

If you missed them in previous editions of ADITextra, watch free content from the United States Taxation course discussing:

 

We’re no longer accepting bookings for this semester’s United States Taxation course. If you would like to express your interest in joining us for the next ADIT exam sitting for Module 2.10 in June 2022, please use the contact form below or email info@extrataxtraining.com.

 

5. Spotlight on UK Digital Services Tax (DST)

Each week, we put the spotlight on a topic covered in one of our classes and offer you free ADIT content. This time, let’s look at the UK Digital Services Tax, introduced by Finance Act 2020. While this was discussed in this week’s UK Tax course, it’s also of interest for the Principles of International Taxation module due to the OECD’s work in this area.

 

The UK’s Digital Services Tax legislation is contained in Part 2 of, and Schedules 8 to 10 to, the Finance Act 2020. It applies to revenue earned in connection with digital services activities from 1 April 2020.

 

DST is a tax on UK revenues (not profits) of digital businesses that provide one or more of the following three digital services activities:

  • a social media service;
  • an internet search engine; and / or
  • an online marketplace.

 

Where the revenues received in connection with the digital services activities, attributable to UK users, exceed annual thresholds, the group must submit DST returns and may have to pay DST.

 

The annual revenue thresholds applying to a group are:

  • £500m of worldwide revenue from the digital services activities; with
  • £25m of these revenues attributable to UK users.

 

DST applies at a rate of 2% on UK digital services revenues above an annual allowance of £25m; unless the group elects to calculate their liability on the Alternative Basis of Charge provision.

 

The DST legislation is new and complex. We’re grateful to Sarah Blakelock, who wrote the learning materials for this topic. Her clear explanations on how the legislation operates, along with helpful illustrations, provide our students with everything they need to successfully answer a DST question.

 

Watch & Learn

Watch part of this week’s UK Tax course for an overview of  ‘Digital Services Tax‘.

Follow us on social media to keep up to date with our ADIT blogs. And don’t be shy, please say hello and let us welcome you to our ADIT community!

 

Stay Informed

Visit our ADITextra blog to find out what else we’ve covered this semester.

Visit our website
Contact us

Follow us on LinkedIn, Twitter & YouTube

 

 

Studying for the Advanced Diploma in International Tax qualification is an excellent way to learn the fundamentals of international taxation. Read ADITextrathe blog for ADIT – to find out more!

Whether you are new to international tax or an experienced professional wishing to showcase your expertise, the ADIT certification offers you the opportunity to stand out from the crowd.

Read on to discover how online study programmes from Extratax Training guide you to success. The spotlight for this edition of ADITextra is the US Controlled Foreign Companies rules.

 

1. Transfer Pricing

While we’re taking a fortnight’s break from the live transfer pricing classes, take the opportunity to check out our free video content on key topics from the ADIT Transfer Pricing syllabus:

 

We’re no longer accepting bookings for this semester’s Transfer Pricing course. If you would like to express your interest in joining us for the December 2021 course, please use the contact form below or email info@extrataxtraining.com. We’ll shorty be launching the December 2021 courses with an attractive early bird booking offer!

 

2. Principles of International Tax

The Principles of International Taxation classes are also on an Easter break, with the students using the time to consolidate their knowledge and tackle their first mock exam. If you missed them in previous editions of ADITextra, watch free videos from the Principles of International Tax course discussing:

 

Controlled Foreign Company (CFC) anti-avoidance rules are part of the Principles of International Tax syllabus. You should have an awareness about the types of CFC legislation implemented by OECD states. So you should check out this week’s spotlight section below, giving you an overview of the Controlled Foreign Company rules in the United States.

 

Fundamentals – Principles of International Taxation

The Principles of International Tax syllabus provides you with the fundamentals of international taxation – a reason why many ADIT candidates choose to study it first, before moving on to a thematic or jurisdiction module.

 

We’re no longer accepting bookings for this semester’s Principles of International Taxation course. If you would like to express your interest in joining us for the December 2021 course, please use the contact form below or email info@extrataxtraining.com. We’ll shorty be launching the December 2021 courses with an attractive early bird booking offer!

 

 

3. UK Tax

The UK tax course is currently on a two week break. This gives the students time to review what they’ve learnt so far, revisit any challenging areas and work on past exam questions. Plus some relaxation time, of course!

 

ADIT UK Tax – Distance Learning Course

Although we’re no longer accepting bookings for this semester’s United Kingdom Advanced International Tax course, you can still benefit from our expertise. We have compiled a comprehensive set of online study materials for the ADIT UK paper. We’ve just launched a limited edition beta-testing version of these materials as part of our distance learning course.

 

The UK distance learning course was written by Catriona Loughran FCA CTA ADIT and other experienced tax professionals, including:

 

If you are interested in joining the distance learning course for the June 2021 exam, please email info@extrataxtraining.com.

 

4. US Tax

In Thursday’s US Taxation course, Ishali Patel shared her international tax expertise, discussing:

  • US company expanding operations globally

  • Foreign branches

  • Controlled Foreign Corporations (CFCs)

  • Global Intangible Low-Taxed Income (GILTI)

  • Passive Foreign Investment Companies (PFICs)

  • Foreign Derived Intangible Income (FDII)

  • Participation exemption

 

Check out the Spotlight section below for a discussion on the CFC rules.

 

Fundamentals of International Taxation – United States

As you can see from the list of topics above, to the uninitiated, US tax can seem like a confusing maze of acronyms! Ishali’s deep understanding of US tax, along with her enthusiasm for sharing her knowledge, means she can guide you through the maze to conquer the fundamentals of US international tax.

 

We’re no longer accepting bookings for this semester’s United States Taxation course. If you would like to express your interest in joining us for the next ADIT exam sitting for Module 2.10 in June 2022, please use the contact form below or email info@extrataxtraining.com.

 

5. Spotlight on United States Tax

Each week, we’ll put the spotlight on a topic covered in one of our classes. This time, let’s look at the US Controlled Foreign Corporations rules. While this was discussed in this week’s US Tax course, it’s also relevant for the Principles of  International Taxation module.

 

A foreign corporation is a CFC if US shareholders own:

  • more than 50% off the combined voting power of all classes of shares, or
  • more than 50% of the total value of the foreign corporation.

 

A US shareholder is any US person owning at least 10% of the value off the foreign corporation.

 

There are two anti-deferral systems in place to prevent CFC’s sheltering income from US tax:

  • Subpart F income, and
  • Globally Intangible Low-Taxed Income (GILTI).

 

Watch & Learn

Watch part of this week’s US Tax course for an overview of  ‘Controlled Foreign Corporations‘.

Follow us on social media to keep up to date with our ADIT blogs. And don’t be shy, please say hello and let us welcome you to our ADIT community!

 

Stay Informed

Visit our ADITextra blog to find out what else we’ve covered this semester.

Visit our website
Contact us

Follow us on LinkedIn, Twitter & YouTube

 

 

ADITextrathe blog for ADIT International Tax. Choosing the right international tax course for you is key to your success.

ADITextra tells you more about Extratax Training’s online international tax courses to help you make this important decision.

Read on to learn about the topics covered in this week’s online classes. The spotlight for this edition of ADITextra is on Principles of International Taxation.

 

1. Transfer Pricing

In Tuesday’s session, James (Jimmy) Ryan started the class by looking at recharacterisation issues. Tax authorities can recharacterise a transaction when they feel it should be disregarded, setting aside the contractual terms of a transaction. A tax authority can do this in one of two ways:

  • Disregard the actual transaction; or
  • Impose another transaction which is closer in substance to what independent entities would have entered into.

Tax authorities typically use domestic anti-avoidance legislation to achieve this outcome, for example, a GAAR (General Anti-Avoidance Rule).

 

Jimmy moved on to discuss Permanent Establishments in the context of transfer pricing. Firstly considering the creation of a Permanent Establishment, then the attribution of profits to a PE. In answering PE questions in your exam, you should be comfortable discussing case law on PEs, including:

 

Online Transfer Pricing Course

If you regularly read ADITextra, you’ll have heard us talking about the importance of practising past paper questions. There are no Transfer Pricing classes for the next two weeks, so it’s the perfect time for our students to consolidate their knowledge and work on their exam technique.

 

Jimmy had planned to release a ‘test’ mock exam for completion over the break, before the full mock takes place at the beginning of May. But then he mentioned to the students that he’s always happy to give them more exam-style questions. And guess what? He’d barely finished speaking before the students said yes, great idea, please give us two mock papers to do! It’s fantastic to see such dedication and enthusiasm from our students.

 

We’re no longer accepting bookings for this semester’s Transfer Pricing course. If you would like to express your interest in joining us for the December 2021 course, please use the contact form below or email info@extrataxtraining.com.

 

 

2. Principles of International Tax

In Wednesday’s Principles of International Tax course, Jimmy discussed the following key topics from the ADIT syllabus:

  • Entity characterisation

  • Hybrid entities and hybrid mismatches

  • Tax havens and harmful tax competition

  • Controlled foreign company (CFC) anti-avoidance legislation

 

Check out the Spotlight section below to learn more about entity classification.

 

Online Principles of International Tax Course

One of the benefits of joining live classes in small groups is asking questions and chatting with the tutor & other students. In this week’s class, the lively discussion covered a range of topics including digital services tax, withholding taxes, work of the OECD on the digital economy and double taxation.

 

We’re no longer accepting bookings for this semester’s Principles of International Taxation course. If you would like to express your interest in joining us for the December 2021 course, please use the contact form below or email info@extrataxtraining.com.

 

 

3. UK Tax

The UK tax course is currently on a two week break. This gives the students time to review what they’ve learnt so far, revisit any challenging areas and work on past exam questions. Plus some relaxation time, of course!

 

ADIT UK Tax – Distance Learning Course

Although we’re no longer accepting bookings for this semester’s United Kingdom Advanced International Tax course, you can still benefit from our expertise. We have compiled a comprehensive set of online study materials for the ADIT UK paper. We’re launching a limited edition beta-testing version of these materials as part of our distance learning course this week.

 

The UK distance learning course was written by Catriona Loughran FCA CTA ADIT and other experienced tax professionals, including:

 

If you are interested in joining the distance learning course for the June 2021 exam, please email info@extrataxtraining.com.

 

4. US Tax

In Thursday’s US Taxation course, Ishali Patel shared her international tax expertise, discussing:

  • Whether a US trade or business exists

  • Safe harbours for US investment activity

  • Permanent Establishment

  • Effectively connected income

  • US branch taxes

 

US International Tax Course

It’s great to see students from across the world coming together to learn about US tax. A minority work in US tax, the rest of them have chosen the US tax module because of its importance in the global business environment.

 

We’re no longer accepting bookings for this semester’s United States Taxation course. If you would like to express your interest in joining us for the next ADIT exam sitting for Module 2.10 in June 2022, please use the contact form below or email info@extrataxtraining.com.

 

5. Spotlight on Principles of International Tax

Each week, we’ll put the spotlight on a topic covered in one of our classes. This time, let’s look at entity classification. While this was discussed in this week’s Principles of International Tax course, it’s equally relevant for the UK Tax module.

 

Private International Law is a branch of law dealing with a state’s domestic recognition of overseas law, and how the courts interpret overseas legislation in a domestic context. How do domestic courts recognise overseas entities and payments? A number of questions have been developed by UK law to help the courts determine the nature of the entity and the payment being made:

  • What kind of entity is it under the foreign law?
  • What kind of payment is it under the foreign law?
  • Given the answer to these questions, what is the tax treatment in the UK?

 

The key case law is the UK Court of Appeal’s decision in Memec plc v HMRC. For your exam, you should know the tests set out in the Memec case for determining whether an entity is transparent or opaque for UK tax purposes:

  1. Does the entity have a separate legal identity?

  2. Has the entity issued share capital (or something analogous to share capital)?

  3. Is the business carried on by the entity or by its members?

  4. Are the members of the entity entitled to a share of the profits as they arise or only when the it distributes the profits to its members?

  5. Who is responsible for debts incurred by the business?

  6. Does the entity beneficially own its assets or do the members?

 

You should be able to apply these tests to a scenario given in the exam, discussing whether an entity is likely to be considered as transparent or opaque.

 

Watch & Learn

Watch part of this week’s Principles of International Tax course for an explanation of ‘Entity Classification‘.

 

Follow us on social media to keep up to date with our ADIT blogs. And don’t be shy, please say hello and let us welcome you to our ADIT community!

 

Stay Informed

Visit our ADITextra blog to find out what else we’ve covered this semester.

Visit our website
Contact us

Follow us on LinkedIn, Twitter & YouTube

 

 

ADITextrathe blog for ADIT International Tax candidates. Achieving ADIT makes you a truly global tax professional, ready for the challenges of today’s international tax landscape.

Speaking recently, a former head of a Big 4 tax practice described how multinational enterprises ‘think globally, but operate locally’. Through studying ADIT, you develop your expertise in international tax law, ready to advise global clients.

Read on to learn about the topics covered in this week’s online ADIT International Tax classes. The spotlight for this edition of ADITextra is on Transfer Pricing Guidance on Financial Transactions.

 

1. Transfer Pricing

In Tuesday’s session, James (Jimmy) Ryan continued looking at loans and other financial transactions. As the OECD’s Transfer Pricing Guidance on Financial Transactions was only released in February 2020, it remains topical and, therefore, highly examinable. You can learn more about this topic, and watch part of Jimmy’s class, in the Spotlight section below.

 

To build the expertise to pass the ADIT exams, you have to gain the knowledge and learn how to apply it by practicing past paper questions. By running live classes with small numbers, we make this skillset a focus of our study programmes.

 

For the weekly assignment, the Transfer Pricing class are submitting two past paper questions for Jimmy’s feedback:

  • Q1 December 2018 – transfer pricing for a global financial services business.
  • Q2 December 2018 – transfer pricing implications of loans, hedging and guarantee fees.

 

If you want to practice these questions to test your understanding, you’ll find the past exam papers and suggested solutions here.

 

Jimmy Ryan ADIT – Global Tax Professional

Maintaining your expertise as a global tax professional requires continuous effort, particularly in the fast-paced area of Transfer Pricing. Jimmy participated in an advanced transfer pricing programme earlier this year to deepen his knowledge. He enthusiastically shares his expertise with his students to develop their skills, both for the ADIT exams and their global tax careers.

 

We’re no longer accepting bookings for this semester’s Transfer Pricing course. If you would like to express your interest in joining us for the December 2021 course, please use the contact form below or email info@extrataxtraining.com.

 

 

2. Principles of International Tax

In Wednesday’s Principles of International Tax class, Jimmy discussed important global tax topics from the ADIT syllabus:

  • The application of double tax treaties to e-commerce

  • The interaction of double tax treaties and domestic law

  • Approaches to applying a double tax treaty

  • The interpretation of double tax treaties

  • Conventions for administrative assistance in tax administration

 

ADIT Exam Preparation

How are your studies for Principles of International Tax progressing? Are you ready to start attempting past paper questions? When you’re undertaking self-study, it can be difficult to know when to start practicing past papers. If you begin too early, you may find yourself confused & disheartened. On the other hand, starting too late means you won’t have enough time to learn how to apply your knowledge and work on your exam technique.

 

We’re now 11 weeks away from the June exams. The time will pass quickly and, if you haven’t already done so, now is the time to get a study plan in place. For more help getting prepared, check out our recent article for the CIOT’s Study Advance newsletter.

 

We’re no longer accepting bookings for this semester’s Principles of International Taxation course. If you would like to express your interest in joining us for the December 2021 course, please use the contact form below or email info@extrataxtraining.com.

 

 

3. UK Tax

Thursday’s UK tax class with Extratax Training’s founder Catriona Loughran covered the following areas of the syllabus:

  • Attribution of Profits to a Permanent Establishment

  • Diverted Profits Tax (DPT):

    • DPT aims to deter and counteract the diversion of profits from the UK by large groups that either:
      • use arrangements or entities which lack economic substance to exploit tax mismatches either through expenditure or the diversion of income within the group, or
      • seek to avoid creating a UK permanent establishment that would bring a foreign company into the charge to UK Corporation Tax (an avoided PE).
    • The Diverted Profits Tax legislation is contained in Finance Act 2015.
    • DPT is a separate tax from Corporation Tax, with its own administrative rules and procedures. The current rate of DPT is 25%.
  • Offshore Receipts in respect of Intangible Property (ORIP) 

 

Finance Act 2019 introduced the ORIP rules. They were examined in December 2020. One of the optional 15-mark questions in Part C provided a scenario and asked candidates to:

  • Outline the background and scope of the Offshore Receipts in respect to Intangible Property (ORIP) rules introduced in April 2019, and provide a high level analysis of how they might apply to the group in the question.

 

The suggested solutions for the December 2020 exam paper have not yet been published. When they are published, you should look at the answer to this question, as it is likely to provide you with a good explanation of the ORIP rules.

 

ADIT UK Tax – Distance Learning Course

Although we’re no longer accepting bookings for this semester’s United Kingdom Taxation course, you can still benefit from our expertise. We have compiled a comprehensive set of online study materials for the ADIT UK paper. We’re launching a limited edition beta-testing version of these materials as part of our distance learning course next week.

 

The UK distance learning course was written by Catriona Loughran FCA CTA ADIT and other global tax professionals, including:

 

If you are interested in joining the distance learning course for the June 2021 exam, please email info@extrataxtraining.com.

 

4. US Tax

Thursday was also the second week of tuition classes for the US Taxation course with Ishali PatelIf you missed it, you can watch Ishali explain the US residency test for individuals in last week’s ADITextra.

 

Moving on, this week Ishali covered the following topics:

  • Foreign tax credits

  • Foreign currency rules, including virtual currencies

  • Entity classification

    • Branch
    • Subsidiary
    • Domestic hybrid entity
    • Reverse domestic hybrid entity
  • Corporate groups & consolidated returns

 

The good news is that you are not too late to join us for the US Tax option. Plus, we’re offering you the opportunity to book for June 2021 at a special introductory rate to celebrate adding Module 2.10 to our portfolio.

 

 

5. Spotlight on Transfer Pricing

Each week, we’ll put the spotlight on a topic covered in one of our classes. This time, let’s look at the recently released OECD guidance on financial transactions.

 

You should make sure that you’re comfortable to answer questions on the application of the guidance, including:

  • Whether a purported loan should be regarded as a loan?

    • Consider the balance of debt & equity funding.
    • Would an independent entity have leant the money in the first place?

 

  • Economically relevant characteristics of actual financial transactions:

    • What are the contractual terms?
    • Performing a functional analysis, from both the lender’s and the borrower’s perspective.
    • Looking at the economic circumstances, such as currency, location, business sector, timing of transactions, macroeconomic trends.

 

You are allowed to take a bound copy of the OECD Transfer Pricing Guidelines into your ADIT Transfer Pricing paper as a permitted book. However, if you are using an older copy of the TPG or the 2020/21 version of the Kees Van Raad ‘Materials on International & EU Tax Law‘, the new Chapter 10 will not be included.

 

If you want to use a self-printed version of the OECD’s report on ‘Transfer Pricing Guidance on Financial Transactions‘ as your permitted text, you must obtain individual, written dispensation from the CIOT for each exam. Therefore, you should contact the CIOT at education@adit.org for further advice and instructions. You can find further guidance on self-printed books here.

 

Watch & Learn

Watch part of this week’s Transfer Pricing class for highlights of the ‘Transfer Pricing Guidance on Financial Transactions‘.

 

 

We wish you luck with studying for ADIT – enhancing your standing as a global tax professional.

 

 

Stay Informed

Visit our ADITextra blog to find out what else we’ve covered this semester.

Follow us on social media to keep up to date with our ADIT blogs. And don’t be shy, please say hello and let us welcome you to our ADIT community!

Visit our website
Contact us

Follow us on LinkedIn, Twitter & YouTube

 

 

Welcome back to ADITextra – the theme for this week’s blog for ADIT International Tax candidates is expertise. The ADIT certification is an excellent way to increase and showcase your international tax expertise.

The Advanced Diploma in International Tax is a practical qualification, with the exam questions mainly focused on applying your knowledge to real-world scenarios. We’ve now reached the half-way point with our live tuition classes for Principles of International Tax, Transfer Pricing and UK Taxation. As a result, the students can see more clearly how different topics on the syllabus blend together to build their overall understanding and improve their expertise.

Read on to learn about the areas of expertise covered in this week’s online ADIT International Tax classes. As our US Tax course launched on Thursday, the spotlight for this edition of ADITextra is Introduction to US Taxation.

 

1. Transfer Pricing

In Tuesday’s session, James (Jimmy) Ryan looked at specific types of transactions:

    • Intra-Group Services

Chapter VII of the OECD Transfer Pricing Guidelines (TPG) on intra-group services concentrates on two issues:
• Has a service actually been rendered?
• If so, what is the charge in accordance with the arm’s length principle?

 

When considering whether a service has actually been rendered, you can reach the conclusion by asking:
• Would a 3rd party business in similar circumstances have been willing to pay for the service, or
• Would the entity have performed the activity itself?

 

Section D of Chapter 7 offers specific guidance on a particular category of intra-group services, known as low value-adding intra-group services, where a simplified approach may be used. Paragraph 7.49 provides examples of services likely to meet the definition of low value-adding services. However, it is important to remember that the services listed in this paragraph do not automatically fall within the definition. For instance, these types of services must not be part of the core business of the multinational group (see Paragraph 7.45).

 

    • Loans and Other Financial Transactions

The OECD released Transfer Pricing Guidance on Financial Transactions in February 2020. Sections A to E became included in Chapter X of the OECD Transfer Pricing Guidelines. While Section F was added to Section D.1.2.1 in Chapter 1 of the TPG.

 

You are allowed to take a bound copy of the OECD Transfer Pricing Guidelines into your ADIT Transfer Pricing paper as a permitted book. However, if you are using an older copy of the TPG or the 2020/21 version of the Kees Van Raad ‘Materials on International & EU Tax Law‘, the new Chapter 10 will not be included.

 

If you want to use a self-printed version of the OECD’s report on ‘Transfer Pricing Guidance on Financial Transactions‘ as your permitted text, you must obtain individual, written dispensation from the CIOT for each exam. Therefore, you should contact the CIOT at education@adit.org for further advice and instructions. You can find further guidance on self-printed books here.

 

Sharing ADIT International Tax Expertise

Maintaining your international tax expertise requires continuous effort, particularly in the fast-paced area of Transfer Pricing. Jimmy participated in an advanced transfer pricing programme earlier this year to deepen his knowledge. He enthusiastically shares his expertise with his students to develop their skills, both for the ADIT exams and their international tax careers.

 

We’re no longer accepting bookings for this semester’s Transfer Pricing course. If you would like to express your interest in joining us for the December 2021 course, please use the contact form below or email info@extrataxtraining.com.

 

 

2. Principles of International Tax

In Wednesday’s Principles of International Tax class, Jimmy continued the detailed review of the OECD Model Tax Convention. If you missed it, check out this edition of ADITextra to watch Jimmy’s introduction to the OECD Model Tax Convention.

 

This week, he guided the students through the following articles:

  • Methods of Elimination of Double Taxation – Articles 23A and 23B

  • Non Discrimination – Article 24

  • Mutual Agreement Procedure (MAP) – Article 25

  • Exchange of Information – Article 26

  • Assistance in the Collection of Taxes – Article 27

 

As part of the discussion on non-discrimination under Article 24, Jimmy used his expertise to summarise the UK Court of Appeal’s judgment in HMRC v FCE Bank plc, which distinguished the same court’s decision in Boake Allen on its facts. You should be able to compare and contrast these cases in the context of an essay on the non-discrimination article in double tax treaties.

 

Building ADIT International Tax Expertise

To build the expertise to pass the ADIT exams, you have to gain the knowledge and learn how to apply it by practicing past paper questions. By running live classes with small numbers, we make this skillset a focus of our study programmes.

 

For the weekly assignment, the Principles of International Tax class are submitting two past paper questions for Jimmy’s feedback:

  • An essay question on non-discrimination:

A non-discrimination article can be found in most Double Taxation Conventions.

You are required to explore the function of the non-discrimination article. Your answer should, at the very least, include a consideration of the types of discrimination Article 24 does and does not contemplate, who benefits from the article, and non-discrimination in relation to permanent establishments.

  • A scenario-based question on assistance in the collection of taxes

 

Would you feel comfortable working on these questions at this stage in your studies? We’re only 12 weeks away from the June exams. The time will pass quickly and, if you haven’t already done so, now is the time to get serious! For more help getting prepared, check out our recent article for the CIOT’s Study Advance newsletter.

 

We’re no longer accepting bookings for this semester’s Principles of International Taxation course. If you would like to express your interest in joining us for the December 2021 course, please use the contact form below or email info@extrataxtraining.com.

 

 

3. UK Tax

Thursday’s UK tax class with Extratax Training’s founder Catriona Loughran covered the following areas of the syllabus:

 

You’ll note that the legal references above are to UK legislation and case law. When you’re sitting the UK ADIT paper (or another jurisdiction module), it’s important to always refer to the domestic legislation before moving on to consider the impact of international tax provisions.

 

For instance, the focus for a transfer pricing question on the Module 2.09 paper will be the UK’s legislation in Part 4 TIOPA 2010. You’ll need to understand and discuss if, why and how the UK legislation applies before considering the application of the OECD Transfer Pricing Guidelines.

 

Similarly, when considering if a non-resident company has a permanent establishment in the UK, the starting point is the UK’s domestic legislation. If the UK activities do not create a PE under CTA 2010, then you are not required to look at the definition in Article 5 of the OECD Model Tax Convention. However, if there is a permanent establishment under UK domestic law, you’ll move on to evaluate the impact of any double tax treaty provisions which could override it.

 

Improving ADIT International Tax Expertise

Although we’re no longer accepting bookings for this semester’s United Kingdom Taxation course, you can still benefit from our expertise. We have compiled a comprehensive set of online study materials for the ADIT UK paper. We’re launching a limited edition beta-testing version of these materials in the next couple of weeks.

 

The UK study materials were written by Catriona Loughran FCA CTA ADIT and other international tax specialists, including:

 

If you are interested in obtaining a set of the UK study materials for the June 2021 exam, please email info@extrataxtraining.com.

 

4. US Tax

Thursday was the first live tuition class for the US Taxation (Module 2.10) course with Ishali PatelIshali welcomed students from as far afield as Kiev, Ukraine and Chicago, USA.

 

As most of the participants are new to US tax, Ishali started with the fundamentals, discussing:

  • Who is a US person for tax purposes?

  • US residency test for individuals

  • Source of income rules

  • Exemptions from US tax

  • Source rules for expenses

  • Withholding tax principles

 

Check out the spotlight section below for an excerpt from Ishali’s class.

 

The good news is that you are not too late to join us for the US Tax option. Plus, we’re offering you the opportunity to book for June 2021 at a special introductory rate to celebrate adding Module 2.10 to our portfolio.

 

 

5. Spotlight on Introduction to US Tax

Each week, we’ll put the spotlight on a topic covered in one of our classes. This time, let’s look at the introduction to US tax provided by Ishali in this week’s first class.

 

US Residents

Who is a US person for tax purposes?

  • US citizens:
    • born in the US
    • one or both parents a US citizen
  • Resident alien individuals
    • green card test – lawful permanent residence
    • substantial presence test
  • Domestic corporation (organized under U.S. law)

 

Residency test for individuals

  • Greencard test – An alien individual is a US resident for a calendar year if, at any time during the calendar year, the alien is a lawful permanent resident of the US (i.e. has a greencard that he has not formally revoked).
  • Substantial Presence Test – To meet this test, an alien individual must be physically present in the US on at least:
    • 31 days during 2020 and
    • 183 days during the 3-year period that includes 2020, 2019 & 2018 counting:
      • All the days you were present in 2020 and
      • 1/3 of the days you were present in 2019
      • 1/6 of the days you were present in 2018

Watch & Learn

Watch part of this week’s United States Taxation class for an introduction to US tax.

 

There’s still time to join our US Taxation course and grow your ADIT International Tax expertise – Book now and let us guide you to ADIT success.

 

 

Stay Informed

Visit our ADITextra blog to find out what else we’ve covered this semester.

Follow us on social media to keep up to date with our ADIT blogs. And don’t be shy, please say hello and let us welcome you to our ADIT community!

Visit our website
Contact us

Follow us on LinkedIn, Twitter & YouTube

 

 

Welcome back to ADITextra – the theme for this week’s blog for ADIT International Tax candidates is support.

At Extratax Training, we believe strongly in the ADIT qualification, and offering you the best ADIT support. We want to see tax professionals around the world studying for it and becoming International Tax Affiliates of the Chartered Institute of Taxation.

This week was a time for celebration as 554 candidates passed at least one ADIT exam. But it was also a time for reaching out & offering support where it was needed.

 

Read on to learn about the topics covered in this week’s online ADIT International Tax classes. The spotlight for this edition of ADITextra is UK corporation tax.

 

1. Transfer Pricing

Following on from last Tuesday’s session, James (Jimmy) Ryan highlighted a key outcome from a functional analysis. Once a functional analysis is complete, it is possible to understand the economic purpose of each entity within the ‘value chain’. Understanding the value chain allows you to classify each entity and apply the correct transfer pricing method.

 

Typically, there is a direct correlation between the profit (and loss!) potential of a company and the type of functions it performs, the risks it assumes and the assets it uses. Last week’s ADITextra discusses how a good functional analysis draws out the FAR:

    • Functions performed

    • Assets used

    • Risks assumed

 

Complex entities holding intellectual property, assuming more risks and performing more complex functions would be considered to be ‘entrepreneurial’ in nature. In contrast, simpler entities carry out activities which can be easily replicated, such as distribution activities, contract manufacturing or contract research & development. These ‘routine’ entities will typically be the ‘tested party’ when determining the arm’s length pricing.

 

Jimmy continued by looking at how an entity with a sales function could be classified:

  • Sales support service

  • Sales agent or commissionaire

  • Limited risk distributor

  • Licensed distributor

  • Full risk distributor

 

Similarly, a company with a manufacturing function could be classified as a:

  • Toll manufacturer

  • Contract manufacturer

  • Licensed manufacturer

  • Full risk manufacturer

 

ADIT Support

After the ADIT results for December 2020 were released on Wednesday evening, we celebrated the success of last semester’s Extratax Training candidates.

 

Unfortunately, we had one Transfer Pricing student who didn’t achieve a pass mark. As part of our ADIT support system, we arranged a catch up. During the call, he explained that he had not managed his time correctly during the paper, so was not able to attempt all the required questions. This is a common yet critical error. It highlights the importance of practising past papers under exam conditions and being rigorous with your time keeping during the exam.

 

The good news is that we’re supporting him to resit the paper. He’s joining this semester’s course to refresh his knowledge and improve his exam technique through completing the weekly assignments and sitting a mock exam.

 

There’s still time for you to join the Transfer Pricing course – we’re accepting bookings until 8 March. You can catch up on the classes by watching the recordings and you’ll have one-to-one access to Jimmy and the team to get you fully up to speed. Don’t delay – book today to benefit from our ADIT support.

 

 

2. Principles of International Tax

In Wednesday’s Principles of International Tax class, Jimmy started by discussing the two past papers questions which the students had completed for the weekly assignment. As a highly experienced ADIT lecturer, Jimmy is ideally placed to offer advice on answering exam questions and help the students learn how to showcase their knowledge to the examiner.

 

While getting expert guidance is important, you will only learn by doing. We can sometimes fool ourselves by reading an exam question and thinking ‘I can answer that’, but it’s not so easy to sit down and write out an answer. That’s the real test of your expertise. And, of course, having someone knowledgeable giving you feedback on your answer is invaluable.

 

Jimmy then continued the detailed review of the OECD Model Tax Convention. If you missed it, check out last week’s ADITextra to watch Jimmy’s introduction to the OECD Model Tax Convention. He guided the students through the following articles:

  • Article 6 – Income from Immovable Property

  • Art 7 – Business Profits

  • Article 10 – Dividends

 

As part of the discussion on Article 10, Jimmy explained the concept of ‘beneficial ownership’, with reference to the following case law:

 

Celebrating ADIT Success

Following an anxious wait for the pass lists to be published on Wednesday evening, the celebrations began. 80% of the candidates who completed the Principles of International Tax course last semester passed the December 2020 paper! This compares very favourably to an overall pass rate of 51%. We’re so proud of their achievements.

 

It’s not too late for you to join the Principles of International Tax course to benefit from our ADIT support – you can book online until 8 March. And don’t worry, you can catch up on the classes by watching the recordings. Plus you’ll have one-to-one access to Jimmy and the team to get you fully up to speed.

 

 

3. UK Tax

Thursday’s UK tax class with Extratax Training’s founder Catriona Loughran moved from personal tax to corporate tax. Catriona started by giving an overview of UK corporation tax, before zooming in on the main topic – corporate residence.

 

One of our aims is to improve accessibility to ADIT study courses – that’s why we focus on online training so that you can join from anywhere in the world. But accessibility isn’t just about being able to attend the classes, it’s about designing study materials to make it possible for you to gain sufficient knowledge of UK tax with little or no practical experience in UK tax.

 

In the UK paper, you would not be asked to do a full corporation tax calculation, or discuss reliefs like capital allowances or patent box in any detail. These are the types of topics you would study for the CTA qualification. However, you may be asked to advise a group setting up in the UK for the first time about the UK corporation tax regime. Therefore, it’s important that you have a general awareness of corporation tax. Plus, it is helpful when you come to study complex areas like Controlled Foreign Companies and the Corporate Interest Restriction.

 

Corporate Residence in the United Kingdom

When it comes to corporate residence, there are two tests in UK domestic law for determining whether a company is UK tax resident:

  • The incorporation test – a legislative test contained in s14 Corporation Tax Act 2009

  • The “central management and control” test – developed through case law

 

Catriona discussed the key cases on ‘central management and control’ (CMC):

  • De Beers Consolidated Mines v Howe (Surveyor of Taxes) [1906] AC 455

  • Bullock v Unit Construction Company [1959] Ch 147

  • Untelrab Ltd v McGregor (HMIT) [1995] Sp C 55

  • News Datacom v Atkinson [2006] S.T.I. 2346

  • Wood v Holden [2006] EWCA Civ 26

  • Laerstate BV v HMRC [2009] UKFTT 209 (TC)

  • Development Securities plc and others v HMRC [2020] EWCA Civ 1705

 

After examining how a company is resident under UK law, Catriona looked at the impact of the UK’s double tax treaties. This included comparing the ‘old’ treaty tie-breaker clause on ‘place of effective management‘ with the ‘new’ clause, where the competent authorities consider a number of factors in seeking to reach mutual agreement.

 

Tailored ADIT Support

The December 2020 ADIT results show how our approach to teaching the UK course works for different types of students. Limiting class sizes to 15 means that we can offer you tailored ADIT support.

 

Contrasting two of our successful candidates, both of whom took advantage of one-to-one sessions with Catriona in the days leading up to the exam:

  • One was sitting the ADIT UK module as part of achieving the CTA qualification (did you know you can effectively substitute the ADIT Module 2.09 for the Taxation of Major Corporates advanced technical paper?) She is at an early stage in her tax career, but has good knowledge of UK tax due to her previous studies and ongoing work experience.
  • The other was working towards the ADIT qualification to demonstrate his international tax expertise. He is a tax lawyer with many years of experience, and is indeed a professional of international tax in his home country. However, he had little experience of UK tax and described finding Extratax Training to coach him for the UK exam as a ‘blessing’.

 

You can still choose to join the UK class and benefit from our ADIT support – the deadline to book is 8 March. You can catch up on the classes by watching the recordings. Plus you’ll have one-to-one access to Catriona and the team to get you fully up to speed.

 

 

4. US Tax

An exciting update on our US Tax course, which starts this Thursday, 11 March. We’re delighted to announce that the lead tutor is Ishali Patel.

 

Ishali is a dually US and UK tax professional with over 17 years of experience with large and medium sized firms, advising on the US and UK tax needs for US persons living outside of the US. She is an IRS Enrolled Agent and a UK Chartered Tax Advisor. Having spent her career helping her clients navigate the complex worlds of both jurisdictions, she has a wealth of practical examples to bring the ADIT US Tax syllabus to life.

 

Ishali has always felt that a qualification such as ADIT would have helped immensely in her international tax career. She believes that the US Tax syllabus provides excellent coverage of the issues affecting globally mobile individuals and international businesses.

 

If you’re interested in joining us for the US Tax option, we’re offering you the opportunity to book for June 2021 at a special introductory rate to celebrate adding Module 2.10 to our portfolio.

 

 

5. Spotlight on UK Corporation Tax

Each week, we’ll put the spotlight on a topic covered in one of our classes. This time, let’s look at the overview of UK corporation tax provided by Catriona in this week’s class.

 

It was Budget Day in the UK on Wednesday, with the Chancellor of the Exchequer announcing some changes to UK corporation tax. The headline grabbing announcement was the increase in the standard rate of UK corporation tax – from the current rate of 19% to 25% on 1 April 2023.

 

Any changes as a result of the 2021 Budget are not examinable for the June 2021 exams. You will be examined on legislation up to and including Finance Act 2020. However, you are expected to have a general awareness of developments up to the date of your exam. A 6% increase in the standard rate of corporation tax is one to note, as it could impact investment decisions by multinational groups.

 

Introduction to UK Corporation Tax

UK resident companies must file tax returns under Corporation Tax Self Assessment (CTSA) for an accounting period (generally in line with company’s financial year). The following documents should be filed with HM Revenue & Customs (HMRC):

  • CT600 tax return plus any supplementary pages, e.g. group relief, controlled foreign companies,
  • Statutory accounts (audited if required) in an iXBRL format,
  • Computations necessary to show that the return is complete and correct.

 

Returns are due within 12 months of the end of the accounting period. The starting point for the calculation of trading profits is the accounting Profit before Tax, calculated in accordance with UK Generally Accepted Accounting Practice (GAAP). Depending on the size of the company’s taxable profits, payment is due:

  • 9 months and 1 day after the end of the accounting period, or
  • in quarterly instalments, with the dates differing under the ‘large’ and ‘very large’ regimes for quarterly instalment payments.

 

There are a number of beneficial tax reliefs in the UK, including:

  • Capital allowances for expenditure on fixed assets:
    • Plant and machinery
    • Integral features
    • Structures and buildings
  • Research & Development (R&D) tax credits:
    • R&D scheme for Small & Medium-sized Enterprises (SMEs)
    • Large company R&D scheme offering a Research & Development Expenditure Credit (RDEC)
  • Patent box regime offering the benefit of a lower tax rate

 

Watch & Learn

Watch part of this week’s UK class for an introduction to UK corporate tax.

 

There’s still time to join our UK Taxation course – book today and let us guide you to ADIT success.

 

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