Minister stonewalls iXBRL delay request

Treasury minister David Gauke has batted back a request from six accountancy bodies to delay the 1 April implementation of mandatory Corporation Tax return efiling using the iXBRL format.

Responding to a letter last week from six tax and accountancy bodies, the minister wrote: “Having read your letter and considered it along with other representations, I would like you and HMRC to proceed on the basis that mandation of online filing in iXBRL will go ahead as planned on 1 April.”

Gauke added: “It seems to me that there will never be a perfect time to mandate filing in iXBRL. There will always be implementation challenges , and HMRC’s challenge here is to work through them in collaboration with the representative bodies.”

A PDF of the minister’s letter is available from the ICAS website.

ICAS assistant director of tax Donald Drysdale was disappointed and continued to fret about problems that were likely to arise during the transitional “soft landing” period after 1 April.

“While the potential benefits to HMRC are obvious, companies and tax agents are left picking up the costs,” he said.  Most of them must rely on commercial software vendors, some of whom have failed to deliver their accounts preparation solutions in time.  Other packages fail to offer the degree of automated iXBRL tagging that had been anticipated, leaving skilled staff with the cumbersome task of completing the tagging manually…

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Comments
Tonykelly's picture

it's not a deadline

Tonykelly | | Permalink

there is no deadline on 1st April.

You have 12 months from the company's year end to file your accounts and tax return.

Anyone who is not ready, ie not prepared to invest in new software, should ensure they have filed all outstanding tax returns by March 31st .

 

Yer but

0098087 | | Permalink

 Yer cause we can all afford new software. When VT was released there were a few bugs with the tagging but it's supposedly sorted now

VT - one bug with the tagging to be more precise

vtsoftware | | Permalink

There was one tagging error and users did get a warning message about it. We fixed that at 5.30pm on the release day. We later fixed some software bugs that applied in rare circumstances. Not bad so far for such a large and complicated project, though I say it myself. For a list, see http://www.vtsoftware.co.uk/support/vtfchanges.htm

Philip Hodgson
VT Software

Sorry

0098087 | | Permalink

My apologies. I wasn't meaning to denegrate VT which I find to be truly excellent. I should have said something along the lines of I wonder how many other providers have had problems, whether minor as VT did or major. Sage have struggled to get things sorted I note.

John Stokdyk's picture

John Turner, CoreFiling MD, comments

John Stokdyk | | Permalink

CoreFiling's John Turner, who led opposition to the suggested delay, celebrated the decision by sending us these comments:

 

  • 1 April is the starting gun, not a finishing line.
  • This is the best time of the year to introduce the CT mandate. No other point in the year gives accountants as much time to prepare.
  • The soft landing guidelines are, it must be said, extremely generous. Far more generous than we thought that they would be.
  • Having said that, we are aware that many filers are getting caught out by the Joint Filing Validation Checks, the latest version of which came out at the end of November. Regardless of the soft landing arrangements, filings which don't pass these rules will not be accepted by the Government Gateway. Mostly the rules are common sense, so should not surprise people. However, a number of filing systems seem to be able to produce invalid documents that won't be accepted. Companies and accounting firms that are concerned about the quality of their filings should consider purchasing a copy of Magnify from CoreFiling, which checks all of these points (and many others) and can provide an independent check regardless of how the documents have been prepared.
  • Of course, CoreFiling Seahorse will not let you produce an invalid document, so for those concerned about the quality of their vendor's iXBRL offering, or concerned about how long producing their iXBRL accounts will take, our partners, including IRIS and Unit4 stand ready to help.

VT can only produce valid iXBRL

vtsoftware | | Permalink

I note Corefiling's comments about a number of filers producing invalid iXBRL, and I would just like to say that VT is not one of them. All the checks carried out by HMRC are built into VT and so it is not possible to generate an iXBRL file that will not get past HMRC's computers. There is therefore no need for VT users to buy a copy of Corefiling's Magnify.

Philip Hodgson
VT Software

iXBRL

FOR25GRON | | Permalink

Surely can be achieved provided one is willing to and positive!

1 April is not the best transition date

istephens | | Permalink

The comments by CoreFiling's John Turner are self-serving and not in the best interests of taxpayers and their agents, many of whom will have had very little time to get used to their tagging software.  While iXBRL was announced by HMRC well in advance, there was very little that could be done by corporates to prepare for this until tagging software became available.

1 April is about the worst date to transition for April year-ends.  The ideal time to transition would be when tagging software has been available for a full cycle. 

My group has a 30 April year-end, and I will be trying my best to get the returns in by 31 March to avoid tagging last year's accounts.  The sensible thing to do is to tag accounts as soon as they are prepared, which we will be doing for our April 2011 accounts.  A deferral of mandatory tagging (not just a very soft landing) would have been very helpful in case I (for one reason or another) just miss the 31 March cut-off and suddenly find I have less than a month to get last year's accounts tagged.

Plenty of time to implement ?

doorsteps | | Permalink

It's disappointing that a Company the size of Sage can't get their act together. Perhaps they should have taken their focus away from dealing with all their other expensive updates slightly ;)

Iris has been excellent as they usually are in dealing with the transition. I'm just glad we moved to them a few years ago.

 

Old Greying Accountant's picture

Seeing as...

Old Greying Acc... | | Permalink

... a 30th April year end would have had accounts filed at Companies House by 31st January 2011 at the latest and the Corporation Tax was due 1st February one wonders why this is an issue?

Why it is an issue

istephens | | Permalink

Some companies are more complex than others.  We are not talking small, simple comps or straightforward accounts here.  And groups have, by definition. more than one company.  That is why 12 months is allowed for sumbission of returns, and why the period allowed was not shortened as was suggested a year or two ago.

As I said, I am trying hard to meet the 11 month effective deadline.  I expect to make it (and have already submitted quite a few returns).  But it would have been nice if the consequences of one or two returns taking more than 11 months but less than 12 months were not so penal.

brendascott's picture

iXBRL

brendascott | | Permalink

What I would really like to see is a good old British compromise as follows: eligible companies filing abbreviated accounts at Companies House are exempt from mandatory iXBRL CT filing and may continue to file .pdf attachments.  Dream on?

 

daveforbes's picture

How low can you go

daveforbes | | Permalink

I shall experiment to see how few tags you need to get acceptance. I guess it will only be half a dozen. You could put that many into an html document using notepad !

The validations that will not be possible until you have "put it all" together are cross validations the HMRC perform checking the info in the comp. accounts and return all match up.

David Forbes

www.forbes.co.uk

Old Greying Accountant's picture

So...

Old Greying Acc... | | Permalink

... the accounts filed at Companies House are incorrect, as the correct tax provisions had not been established?

Tax provisions are provisional

istephens | | Permalink

Obviously, reasonable estimates are used for the audited accounts in the normal way.

Tax returns require a higher degree of precision.  That takes time.

I think my chain is being pulled.

Why FRSE companies?

Andy3T | | Permalink

The vast majority of CT returns are filed by SME's, most of whom qualify for the FRSE, so from HMRC's view if these weren't filed online then HMRC would still have the cost, delay, etc of processing large numbers of returns manually.  Also I'd expect that HMRC wanted the tags partly to make it easier to gather and analyse economic data - if SME's were excluded they would have no real information on a large section of the economy.

Also iXBRL will feed directly into HMRC's risk assessment - enquiring randomly into very small entities is currently very inefficient and so generally not done.  Being able to automatically identify companies with unusual margins per the iXBRL tags should allow HMRC to focus enquiries into the micro sector much more cost-effectively.  I'd suggest adding explanatory notes to the computation if the gross margin is skewed by a discounting sales drive, or a lot of staff are hired at the end of the period, etc!

Why April?

Andy3T | | Permalink

My understanding is that the most common year-end's for companies are March and December.  So the April deadline is just after the March returns are due to be in, and still gives the December companies 9 months.   I'd have gone for 1 May as the introductory date myself as my experience is that a fair number of companies have 30 April year ends, but I'd presume that Companies House were asked for the statistics - unless of course HMRC just used the fiscal year from habit.

As a possible work-around for istephens, if the difficulty in filing early (which I'm aiming to do for all my clients up to September year-ends) is due to the need for third party data, you should be able to file the return before 1 April on the basis of an estimated number (remember to tick the box on the CT600) and then amend the return after 1 April - I can't remember if amended returns are fully exempt or not off the top of my head, but since you don't need to file accounts with an amended return you would certianly avoid the need to tag the accounts.

iXBRL

marian | | Permalink

As usual VT has come up trumps.  Well done Philip as usual giving a super product that works and at no update cost.

A very grateful small practitioner

Marian

There is no point exempting small companies

ringi | | Permalink

The return for a small company can be done using the combined Corporation tax and Company’s House submission system.      Also all small companies returned that are due in April should have been done by their accountants many months ago, so there should be no issue in waiting a few weeks for the software to catch up.

As far as I can see, the only real problems (apart from accountant not being will to move with the time) are with complex companies that have to have their accounts done with custom systems – exempting small companies would not help with these. The only exemption for small companies I would like to see is for companies that submit their own returns including none profit companies like sport clubs.However I would like to see the list of required tags being dependant on turn over, the “soft landing” with very few tags required to begin with seems very sensible.

What strange language is this?

78874Ja | | Permalink

I remember training as an Accountant. I am yet to go on a seminar which will explain this new language to me. I do hope that my time will not be spent on tagging (whatever that may be) as I want to earn a living at the job I trained for.

Google iXBRL?

Andy3T | | Permalink

If you want to find out the basics of what iXBRL is HMRC, the major software houses, etc have produced reams on iXBRL. 

One explanation I liked was a comparison to microsoft word - a human reader normally just sees text in various shapes, and sizes.  A computer however sees various comments (tags in iXBRL jargon) around the text which tells it the font to use, the colour, spacing, etc, etc.  In an iXBRL document instead of these tags saying something like 'this is Arial size 14 font, right justified' the tag would say perhaps 'this is a P&L item, turnover, turnover on continuing activities, in £ sterling, a credit, accurate to £1, current period item'.

 

In practice you need to:

1. Make sure that the accounts are proper statutory accounts - not abbreviated, missing notes, etc - it will be very easy for HMRC to identify and refuse to accept 'incomplete' accounts under iXBRL.

2. Tag the accounts using one of the following methods:

2.1. Outsource the tagging to one of the firms on HMRC's certified list. 

2.2.  Prepare the accounts in in a HMRC-certified-as-compliant-accounts production package such as Iris, VT, Caseware, etc which will automatically tag most (hopefully) of the taggable items and then use the system interface to tag the remainder of items needing to be tagged.

2.3. Prepare the accounts, and then copy them into HMRC's free online product (not available for complex accounts, otherwise not particularly user friendly) which will automatically tag them.

2.4. Prepare the accounts in word/excel/etc and then convert them into an iXBRL file using a commercial converter.

Converter's vary hugely, but in the main you need to import the accounts into the converter, you will then see the accounts in one window as a text document with several windows to the side/below/etc.  One of these windows will have a long list of titles like turnover, fixed asset additions, directors names, etc - and other windows will have details like 'current year, GBP sterling, 'in round thousands', 'debit', etc to be entered/selected.

You then need to highlight an item in the accounts and then use a drag and drop method to assign the information in the other windows to them.  The converter softeware will then generate the iXBRL tag itself which is unreadable computerese.  All the accountant need to do is know what the item in the accounts represents, and what items need to be tagged in the first place.

Converters vary significantly in the degree of automation, user-friendliness, etc.  Good luck.