iXBRL - What you need to know
Managing your tax obligation efficiently and more!
Background
From 1 April this year it is compulsory for almost all limited company accounts, CT600s (company tax returns) and the supporting tax computations for accounting periods ending after 31 March 2010 to be filed in iXBRL format.
There are very limited exceptions to this, the main one being for "smaller" charities (that is, one where, together with any wholly owned subsidiaries (companies owned by the charity), the combined income does not exceed £6.5 million for the accounting period). For these, the CT600 has to be filed in iXBRL format, but the accounts can be submitted as a PDF file.
What is iXBRL?
inline eXtensible Business Reporting Language is a computer-readable format that can also be read by people - rather like the HTML code that is used to write and display web pages. The information in the accounts, such as the company name, the figures in the profit and loss account, and so on are “tagged” to enable the data to be captured electronically.
Why the change?
In 2006, the Carter Report recommended that all tax returns should be filed electronically. The Government accepted the Report. This is the implementation of that recommendation for companies.
Who benefits?
HMRC will see cost savings as it saves the time currently spent manually keying-in accounts and tax returns. This automated data collection should also help them target tax enquiries at companies that deviate from the norm. There is no benefit to the taxpayer and most will actually see their compliance costs increase.
Surely my accountants will take care of this for me?
In many cases, that will be true. Where your accountants prepare your annual financial statements using appropriate software, most of the software houses have upgraded their packages to allow for the accounts to be converted to iXBRL format. However, the conversion process is not 100% accurate, and extra time may be needed to ensure that the iXBRL file is fully compliant.
If, however, you prepare the accounts yourself in, for example, Word, someone has to convert these into iXBRL format. This is also true if your accountants produce the accounts but do not use software that will produce an iXBRL file.
Various companies offer to carry out this conversion, and this is a service that Wilkins Kennedy provides. If you would like further details of this service, please speak to your usual contact at Wilkins Kennedy to discuss your requirements.
There is a further hurdle for quoted companies as their auditors are prohibited from assisting with the conversion, and so third parties will need to become involved here. Wilkins Kennedy can help in these circumstances and also where accountants do not have their own iXBRL file conversion software, or routines.
Does HMRC provide software?
They do, but it is limited in capability and only suitable for small companies. It is quite a laborious system to use but, for very small, unrepresented companies, this may be a possible workable solution.
Is anything else changing?
For the first year of implementation, HMRC has said that it will adopt a "soft landing" approach. This means that, provided you have made a good effort to get your accounts and tax return into iXBRL format and you have succeeded in filing them online, they will not impose penalties for incorrect or missing "tags" (the detailed naming elements) in iXBRL files.
During the first two years (so up to 31 March 2013), only a limited number of tags (from a list of around 1,250) have to be applied. However, from 1 April 2013, the full set of tags for UK accounts (some 6,500 possible items) will need to be applied.
Companies House are also modifying their systems to allow for iXBRL accounts to be filed online, and this will also become mandatory from 1 April 2013.
Action needed
If Wilkins Kennedy are acting for your company, producing your accounts and tax returns in our software, then there is no need for action on your part.
If your accountants produce your accounts and tax computations in software that automatically generates an iXBRL file, there is probably no action needed by you.
Where you currently produce accounts in-house in, for example, Word or Excel, it may be worth seeing if your accountants can deal with the accounts production process and generate the iXBRL file automatically for future periods.
However, if your accounts will continue to be generated outside of a system that produces an iXBRL file, or your accountants do not offer an iXBRL service, please talk to us about how we can help you.
Please note
We have taken care to ensure the accuracy of this publication, which is based on material in the public domain at the time of issue. However, the publication is written in general terms for information purposes only and in no way constitutes specific advice. Wilkins Kennedy can accept no liability for any errors or omission or for any person acting on or refraining from acting on the information provided in this site.