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iXBRL delay: the case for and against

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4th Feb 2011
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With the Treasury considering the pros and cons of extending the deadline for iXBRL efiling, AccountingWEB.co.uk members, software experts and professional representatives offer ministers their advice.

Exchequer secretary to the Treasury David Gauke is this week considering whether or not to agree to a request from six tax and accountancy bodies to delay the introduction of mandatory online filing for Corporation Tax for six months.

ICAS technical director Donald Drysdale has been strongly opposed to iXBRL since Lord Carter first proposed it in 2006, arguing that the inline XBRL (iXBRL) format decreed for the new regime is an untested technology that has never been used on this scale before.

“We’re hopeful that the minister will listen to the accountancy bodies’ concerns about the effect on businesses,” he said.
 
Drysdale explained that the tax bodies’ joint initiative was triggered when HMRC consulted them about guidance covering the transitional period around the 1 April iXBRL implementation date.

“The guidance was quite inappropriate and brought things to a head. It’s not a competition to get HMRC to back down for the sake of it. The transition they are trying to impose is totally unrealistic. With a little tweaking, there’s a compromise where the minister can stand up for reducing red tape, HMRC will not lose too much face and we can gain an advantage for business and growth.”

HMRC has stood firm on its timetable, commenting: “The current plan to mandate the online channel with iXBRL for Company Tax Returns remains in place.”

However industry insiders such as Digita founder Jerry Rihll acknowledged that there is a chance the minister could relent. To help him make up his mind, this article brings together some of the points raised during the past two days of frenetic debate.

If you would like to add your own views, feel free to comment at the end of the article, or choose your preferred option in our online poll, which is currently showing 51% in favour of sticking to the existing deadline.

In favour of keeping the deadline as is
Ranged against the tax bodies are a number of accountants and software developers who have already put in the work to get their systems ready for the transition to CT efiling (with Companies House statutory accounts to follow in 2013).

AccountingWEB.co.uk member Old Grey Accountant put it: “Why should we who have invested properly in our practices have bothered if the goal posts are moved for the benefit of those who were more interested in their practice as a cash cow rather than a professional entity?” The same question could also be asked of some software developers.

In the forefront of the anti-delay faction is John Turner, CEO of CoreFiling, the company credited with inventing iXBRL to solve HMRC’s dilemma about how to use the XBRL tagging system while still allowing preparers to format and view accounts the way they want. Now operating in tandem with IRIS in the accountancy marketplace, the company’s software is behind the IRIS OpeniXBRL Taxonomy tool released this week.

Turner defended his turf robustly, even if he may have gone overboard by suggesting the tax bodies’ letter is part of a “disinformation campaign” orchestrated by one or two large software players for their commercial advantage.

Turner, whose views are taken seriously by the Treasury, argued that HMRC’s approach has been carefully prepared and communicated: “The Revenue has worked towards the mandate since 2003. The iXBRL mandate is the right policy and should accrue very significant benefits to HMRC, both in terms of administrative efficiency and focusing their investigations in the right places.”
 
CoreFiling has invested more than £1m in developing its tools, and other suppliers have spent just as heavily to meet the deadline. Having taken the HMRC initiative seriously and met the needs of their customers, “They should not be penalised at this very late stage,” he said.

In a separate post on the AIA website, he added: “The 1 April date is not a deadline. It’s the starting gun. There are plenty of steps that can be taken to mitigate the risks associated with the mandate.”

Against extending the deadline
While they are currently in the minority, some AccountingWEB members have backed the professional bodies and spoken up for the difficulties faced by ordinary businesses and advisers.

Anne Marie Sewell commented: “My software is supposedly ready and installed but, so close after the tax deadline, my brain is not. I understand how iXBRL works, I have tried my software but… I cannot automatically prepare and file legally compliant accounts with my iXBRL software. So I have to work out how to manually tag and that is definitely not intuitive.”

With only two months to go, the deadline is far too close, she continued. “I don't think we have had enough time to prepare because the software suppliers have not released the updates quickly enough. I don't blame them, I understand how much work and cost has had to be put into this. The time limit is clearly wrong. And I have only been able to realise now, as the iXBRL software is being released, just how big and difficult this change is.”

Member TommyJ pointed out that at this late stage, the debate about the deadline is tending to descend into what might politely be termed “my software is better than yours” comparisons. But just having a program ready is only part of the overall solution. The real challenge will come when companies and their agents try to plug into the government gateway and encounter the kinds of quirks and exceptions that Sewell mentioned.

It’s worth remembering that the plea for the delay was sparked by discussions about now to negotiate the transitional, “soft landing” period after filing becomes mandatory.

“In the last number of years I have spent numerous hours on the phone with several software houses/HMRC/Companies House trying to figure out ELS/FBI/Electronic Filing and other software houses and I would prefer not to have to do that,” said TommyJ.

To those laughing and boasting about their choice of software, he countered: “Surely we are in this together and if six of the main bodies come out and have asked for the delay I'd be happy enough to leave it another six months if it means less of those lengthy tech support calls to whatever organisation.”

What the vendors say

  • Jerry Rihll, Digita: “We have worked night and day to ensure that our customers have a choice of Digita iXBRL solutions well before the deadline and these were released in October 2010 and December 2010 respectively (Digita iXBRL Converter for manual tagging and Digita Accounts Production for automatic tagging). I think the delay will help customers of suppliers who have been late or unable to provide a satisfactory iXBRL solution.”
  • David Wells, CCH: “CCH has had a number of iXBRL-compliant products in the marketplace since December. All of the CCH’s users will have been provided with iXBRL-compliant products ahead of the 1 April 2011 deadline. CCH’s main focus has always been to ensure they have the products in advance of the deadline – but, more importantly, they can familiarise themselves with the product functionality to enable them to define their workflow processes: Both of CCH’s Corporation Tax products are fully iXBRL compliant and were released to clients last year on 1 December 2010; CCH Review & Tag, a new an iXBRL accounts conversion and tagging tool was released on 22 December 2010; iXBRL updates to VAP and PROcap will be released during the week commencing 7 February 2011.”
  • Phill Robinson, IRIS Accountancy Practice Solutions (via AccMan): The growing level of hysteria surrounding HMRC's impending iXBRL accounts requirement is a concern... We have made a multi-million pound investment in ensuring our software is fully iXBRL compliant not only in time for mandation, but ahead of schedule, and we are not alone in this. Many other software vendors have also made commitments to support this new standard, and have had products available on the market for some time... Many of our customers have developed such an understanding of iXBRL that they have taken it upon themselves to develop new business practices in support of the technology... As a result, we would strongly recommend that HMRC maintain its current implementation timetable.”
  • Tim Good, Absolute Accounting: “I really don't see what the problem is with the current implementation programme, especially given HMRC’s soft landing approach. If you read the letter to David Gauke, all that the professional bodies are asking for is a six month delay in mandatory iXBRL accounts filing and an extension to the soft landing regime thereafter.”
  • David Forbes, Forbes Computer: “HMRC have already said there will be a soft landing. If the accounts coming in aren’t tagged up quite as much as they should be the HMRC could be very lenient for the first few months... and let’s face it you would think accounts production software should know what it is putting in the accounts, so identifying turnover, profit etc. shouldn't be too hard. A short term relaxed tagging requirement would bring down the cost of manual tagging too. If a vendor is running behind schedule and by April only 80% of the items will be tagged, maybe the HMRC should just say that is good enough for the first few months (after all it is 80% more than they currently get with a PDF).”
  • Neil Douglas, Eureka Software: “One thing I cannot accept is that accountants are going to be excited about tagging accounts themselves. I looked into this two years ago with some tagging software on trial and found it tedious and time-consuming. Seems to me the best solution would be to make it optional, but with some sort of incentive for people who do file in iXBRL (similiar to the PAYE discount scheme) for 12 months or so. I can’t say I would too chuffed with that having spent 2-3 years working towards 31 March 2011 but there you go. Worse things in life.”
  • Sage declined to comment on this issue.

A parting shot
Henry Ejdelbaum, partnership managing director of AIMS, a firm that uses Digita’s system, took a step back from the short-term panic about the compliance deadline and argued that in the long run iXBRL will make life easier for business as well as HMRC.

“Because of a general mish-mash of information surrounding iXBRL, the focus has been on the burden of introducing iXBRL rather than the benefits of a sensible concept that is already working well in other European countries. We need to ensure that the messaging is right and that the profession sees iXBRL as more than just another government initiative in an over regulated environment. Let’s not forget that some regulation is useful.”

Fight through the iXBRL information mish-mash with these resources:
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Replies (7)

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By MBK
04th Feb 2011 13:37

Our professional bodies really can't win can they?

They are often moaned at, with justification, for not supporting the profession as they should - particularly smaller practitioners.

And yet, when they come out IN UNISON to suggest that things are moving too quickly, they are accused by some of being puppets of some of the software producers. That is an insult.

Don't forget that they have all been intimately involved with what is a huge change (I don't think most people actually realise what is about to hit them) and they have the best knowledge of what the real situation is. The software vendors tell us what they want us to hear. The institutes know what is really happening.

Most of us will remember the debacle that was the early years of self assessment online filing. Do we want that again?

So, my view is that, if ALL of the main accounting bodies think it should be deferred, then it should be deferred. And we should be applauding them for standing up for us. Don't forget that all they are asking for is that accounts can be submitted as pdf's for a period of not less than 6 months. Is that such a big deal?

 

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By Softpark
05th Feb 2011 06:17

Announcement: Softpark 21 (India) becomes India's first company

Softpark 21 (India), India’s First Company to be Recognized by HMRC, U.K. for its iXBRL-Compliant ResearchPoint Platform
New Delhi, India – February 2, 2011

Softpark 21 (India), a leading Indo-US software company since 1993 and a specialist in XBRL (eXtensible Business Reporting Language) automation software, is pleased to announce that it has become the first and only Indian firm today to receive HMRC, U.K. recognition for its ResearchPoint-XBRL platform in all three iXBRL categories.

We are very excited that regulators in UK have recognized our state-of-the-art XBRL solution and services. With HMRC recognition we are ready to serve U.K. customers for their iXBRL filing needs starting April 1, 2011.

For more information on HMRC & iXBRL visit www.hmrc.gov.uk/efiling/ctsoft_dev.htm Contact SoftPark at:   Arun Bhatnagar CEO [email protected] http://www.softpark.com Mob: +91 9811030288

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By mcelwaine
07th Feb 2011 11:56

iXBRL - institutes have got it right

It is entirely understandable that Sage's competitors do not want the deadline extended, as they hope to win customers from Sage. But why should accountancy practices and businesses who use Sage software be penalised (either cost/time of switching to another software provider or having to use Sage's 'interim solution' tagging tool which will require more manual intervention), because Sage has messed up? I cannot see that allowing accounts to be filed in pdf for an extra 6 months will really make much difference to HMRC (they will still have iXBRL computations) compared to the extra time/cost/hassle for some taxpayers and their advisers.

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By JeremyNewman
07th Feb 2011 13:15

Soft Landing

It would inform the debate massively if HMRC were to set out exactly what they mean by "soft landing" and how they propose to handle things in practice.

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By Martin B
07th Feb 2011 16:09

Soft landing

I agree, clarification is required as to exactly 'soft landing' means. Does it mean that we acn still submit paper ct600 and accounts?

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By peterlashmar
08th Feb 2011 11:24

iXBRL

All I will say is:

What a complete shambles

This is supposed to be compulsory from the end of NEXT MONTH.

Yet again, David Hartnett is presiding over a total fiasco. As a guestimate, I should think that If he had not let Vodaphone off billions of pounds of tax HMRC could have exempted from tax all companies which are exempt from Audit then that would avoid any need for computerised filing.

Peter Lashmar

 

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By sandeepjohn
06th Sep 2011 11:23

iXBRL decisions

The choice by the HMRC to go ahead with the soft landing period makes sense, but the onus will be on companies to be fully prepared. 

Companies/Accounting firms will have to make the right decision on iXBRL software/providers who can help in the iXBRL conversion process. 

If you are looking to outsource your iXBRL process, you could consider using our pay-as-you-go web based service at www.datatracks.co.uk 

 

 

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