Sage's Simon Taylor explores what practices should be doing to prepare for iXBRL.
For years organisations have been looking to leverage off technology to enable “better, faster, cheaper” decision making. The UK is now trying to implement a solution to this issue.
Following recommendations made in the 2006 Carter Report (a systematic review of HMRC’s online services) a new mandatory filing regime will be introduced from 31 March 2011. It will only accept accounts and tax computations filed electronically with the CT600, using a data standard called XBRL (which stands for extensible business reporting language). The changes to the filing requirements and the processes to generate the XBRL data may seem relatively innocuous, and may still be attracting little attention, but they will present both challenges and opportunities.
Defining the new system
In simple terms, XBRL is a ‘language’, written specifically for business reporting. It contains a taxonomy, a defined set of entries, which includes all the elements of data that users would expect to see in a set of accounts and corporate tax computations. The accounts and tax computations you send electronically to HMRC must be tagged so that the HMRC systems can read this automatically, without the need for staff there to input data manually – a costly and inefficient process.
HMRC is looking to eliminate these costs with XBRL. As well as speeding up the input of data and reducing errors, the idea is that the resulting data can then easily be compared between companies and sectors both in the UK and internationally.
Historically, if HMRC wanted to compare the information for Company A and Company B for example, it would have had to interpret individual entries in the accounts and assess whether the items in each were directly comparable, before it actually started to compare them. The need for human intervention from specialist staff in this process is expensive. Using XBRL means that all accounts will be ‘written’ in the same language so HMRC systems can instantly identify comparable data, with minimal intervention.
The UK are not the first to implement XBRL, however the manner of its approach and the form is unique. In its native form XBRL is not easily interpretable by humans. Therefore, iXBRL has been decided on as the intended technology to render financial statements moving forward. Inline Extensible Business Reporting Language is simply the rendering of XBRL into human readable form, taking a set of financial statements in XBRL and putting them in a form the user would expect to see the accounts in. The benefits of this are that humans and computers can both read the output.
Preparation for iXBRL
How much preparation you need to do for iXBRL depends both on how you and your clients work together to prepare and file accounts currently, and on how much you both want to leverage XBRL...
More iXBRL resources
iXBRL coverage and Expert Guides on AccountingWEB.co.uk
HMRC CT Online filing pages, featuring software demonstrator and recognised products