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What you need to know about iXBRL

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3rd Mar 2010
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For close to a decade, financial reporting technology nerds have been investing a lot of time and intellectual activity in XBRL, the eXtensible business reporting language. After years of indifference from accountants, XBRL leapt to the top of the UK profession’s agenda when HMRC set 1 April 2011 as the date from which companies will have to file their Corporation Tax computations and supporting accounts electronically using the data exchange standard.

If you are not fully up to speed with iXBRL, you now have just over a year to get your processes and systems ready for the switch. This article sets out some background information about XBRL and iXBRL and presents a range of scenarios to help you plan your preparations.

Countdown to iXBRL

Now - HMRC CT Online software with CT600s with iXBRL accounts & computations capability available.

Mar-Sept 2010 - Some software packages recognised by HMRC for online filing. More products will follow.

1 Apr 2010 – CT returns relating to financial years ending after this date should be filed with accompanying accounts and computations in iXBRL, but you can buy extra time by filing accounts early before the 31 March 2011 deadline.

Summer 2010 - Companies House plans to open voluntary iXBRL filing mechanism for abbreviated accounts.

31 Mar 2011 – Final date for which non-electronic CT600s and PDF computations & accounts will be accepted.

Summer 2011 - voluntary iXBRL extended to all accounts.

What is XBRL & how does it affect you?
XBRL was originally devised as a means to transfer accounts and financial data between electronic systems. Based on XML (eXtensible Mark-up Language), XBRL is similar to the HTML tags that is used to define web page layouts. Rather than defining formatting options such as <title> or <font> , XBRL tags have been extended to cover common financial data elements such as <ifrs-gpAssetsHeldSale> and <ifrs-gp:CurrentTaxReceivables>.

XBRL has been around for more than a decade and was initially championed by financial analysts, who saw it as a means to automate the collection and comparison of data on company performance. This use of “interactive data” has been embraced by the US Securities and Exchange Commission, which now requires companies listed on the exchanges it regulates to file their quarterly and annual accounts using XBRL.

While conceptually simple, XBRL is complicated by the variety of data elements that can appear in financial statements, with separate data maps (or taxonomies) catering for different financial reporting regimes and company types. By way of example, the full UK IFRS taxonomy includes 3,725 separate tags; UK GAAP has 5,292. Specialist taxonomies exist for banking, extractive industry and work is underway on equivalent data dictionaries for charities and other entities.
When HMRC jumped aboard the XBRL bandwagon, its Corporation Tax taxonomy required 4,561 XBRL tags. It also ran into the thorny problem of presentation. Company law requires accountants to submit an exact copy to Companies House of the financial statements they prepared. There is no way a page of raw XML data tags could reflect the formatting and layout of those statements.

The mechanics of iXBRL CT computations and accounts
HMRC’s solution to this problem is iXBRL, a hybrid that combines the XBRL data tags with HTML formatting that make it possible to view an accurate reproduction of the accounts in a web browser. Making the format mandatory for CT accounts/computations and setting 2011 as the deadline provoked outrage from the profession and a few pained whimpers from the tax software industry, but there is no turning back.

What will be expected from companies that pay Corporation Tax from 31 March next year will be an annual CT600 return filed online, accompanied by supporting computations and accounts in the mandated iXBRL format. There are still some grey areas around what to do with additional information – the sort of explanations contained in the personal tax return’s “white space” boxes – and the current advice is to continue submitting this as PDF files, and then chase your HMRC contacts to ensure they make a note of it.

If you’d like to be a pioneer, HMRC’s CT Online portal is open for business now to accept your submissions via a PDF form that, like the Companies House mechanism for abbreviated accounts, will convert the information into iXBRL for you. The mechanism is a one-shot data entry process, based around the current Short Company Tax Return. It will accommodate most types of trading loss, but will not be suitable for companies with more complex tax affairs, nor is it recommended for those who prepare returns for multiple companies. These cases would be better handled by a commercial CT application; five systems have already passed HMRC’s submission testing and more are on their way.

HMRC’s soft landing
At a recent series of ICAEW roadshows on iXBRL, HMRC senior manager Jen Little reassured accountants the department was adopting a “soft landing” approach where it will take a light touch with mistakes and delays committed by filers who take reasonable care to comply with the new rules.

“We’re not in the business of setting hurdles and looking to penalise you for failing to clear them,” she said. “We want to work with you to resolve things that are going wrong.” Extensive information and a demonstration version of HMRC’s iXBRL filing mechanism are available on the department’s website to help people get used to the processes and technical requirements, she added.

During the transitional phase running from now until two or so years after 2011, HMRC will not be requiring companies to tag every item in their accounts, but a limited number of  items that fall within its minimum requirements for the relevant accounting standards used – between 1,250 and 1,630 tags.

Anita Monteith, Tax Faculty technical manager explained: “It’s only where accounts cross over the taxonomy that need to be tagged. For the simplest companies, there won’t be that many concepts that will be of interest to HMRC. Even when you get to the full list, you’re still highly unlikely to tag the full amount.”

The message from ICAEW, HMRC and software developers is not to be frightened of iXBRL - there will be tools to take care of it for you. With such a short time to prepare – and a relative dearth of products on the market at the moment – their advice is to work out your strategy and system requirements now, and to start shopping around for suitable options. In Little’s words, though, it might be worth “waiting until there’s a greater choice of software” before making your final choice.

How should you prepare
Here are some of the points that different types of CT filer should consider:

  • Firm with negligible business client base – Part time tax advisers working with mainly personal clients may think they are relatively unscathed by iXBRL, but most end up preparing occasional company accounts to work out personal tax liabilities. HMRC’s online tool may work either for the client or agent to file the CT return, but the manual keying required is labour-intensive and potentially error-prone, whoever does it. Even if you only a have couple of clients, you’ll have to do it all over again next year. You could outsource the activity to an iXBRL data-tagging service such as DataTracks, or look at commercial automation tools.
  • Practice or company producing accounts in Excel, Word and PDFs – CoreFiling’s John Turner explains that “post-production” tools such as his online Seahorse system are designed for firms that do not want to overhaul their accounting processes because of the new regime. Various online and spreadsheet/database tools will be able to tag existing accounts formats with the relevant descriptions and convert them to the required iXBRL format. Having done the exercise once, the software should remember the associations the next year, but will would need to be updated to reflect any changes in the underlying accounting standards or XBRL taxonomy.
  • Firm using separate “best of breed” tax and accounting applications – Your tax and accounts departments went for the best tools for their respective jobs, and will have worked out conventions for sharing the relevant data between them. But will those arrangements be able to support iXBRL CT filings and, later, full company accounts? You will need to question your suppliers carefully to see whether they have adequate plans to output the necessary formats not just for HMRC and Companies House, but to the other applications within your practice. If they don’t have convincing answers, your choices boil down to: an external iXBRL tagging service; a post-production tool; or becoming a...
  • Practice using integrated software – The message from CCH, Digita, IRIS, Keytime, Relate and Sage is, “Don’t worry your pretty little heads about iXBRL, we’ll take care of it.” While initially a CT issue, iXBRL is much more of a profound challenge for accounts production systems, which will not only need to output the formatted XBRL accounts, but also accommodate impending changes to the underlying GAAP. The reason these software vendors are purring so reassuringly is that the transition to iXBRL gives them a great opportunity to preach the advantages of the integrated approach.

Corporate tax departments that handle their own CT accounts – According to HMRC, only one in five companies file their own CT returns. Some organisations will output trial balances from their general ledger systems and process these in a separate tax application. These organisations will have a wide range of individual requirements, but will have to review their arrangements and make similar choices as best of breed accounting firms.

What next?
Companies House is on a parallel course with HMRC on iXBRL. It will introduce a compatible filing mechanism for abbreviated accounts this year and plans to support full unaudited accounts in iXBRL by the summer of 2011, giving companies an opportunity to file the same accounts data just once. As the integrated software developers have pointed out, XBRL affects general ledger and accounts production systems as well as tax software. The imposition of iXBRL for both Corporation Tax and final accounts is going to cause major headaches for all the accounting professionals listed above. As HMRC pointed out in its submission to the Accounting Standards Board on the future of UK GAAP, the plan to converge on to IFRS for SMEs by 2012, while still retaining FRSSE for smaller entities, will add to the complications for companies going through the transition to iXBRL CT filing in 2011. While pressing ahead with its iXBRL deadline, HMRC asked the ASB to delay the change in GAAP for a year.

While acknowledging the difficulties ahead, HMRC’s Little pointed out that the tax department will not be the only beneficiary of the streamlined processing that XBRL allows. Several pilot schemes run by large businesses highlighted some “Byzantine” processes in their accounts preparation processes. “They’re finding it a benefit to stand back and take a look at how they can modernise these processes for when XBRL comes in,” she said.

Accountancy is all about coping with technical change. Educating yourself about the iXBRL is part of the job, along with implementing systems to cope with the requirements to use it. In its white paper on the subject, Digita argues for adopting iXBRL filing early (with the caveat that you wait until the final quarter of this year for HMRC and Companies House to agree a common filing taxonomy and for the software companies to finalise their programs: “That way you can get used to the process changes whilst HMRC are likely to be in a ‘light touch’ phase, and you will have time to fall back on paper if the HMRC systems have issues.”

This guide is intended to point you in the right direction and get you to the starting line. Below is a list of references and information sources to help you take the next steps.

Further reading
iXBRL coverage and Expert Guides on AccountingWEB.co.uk
HMRC CT Online filing pages, featuring software demonstrator and recognised products.
Digita iXBRL website & whitepaper
Keytime iXBRL guide - Everything the practitioner needs to know
Sage iXBRL website & and AccountingWEB article Preparing for iXBRL
XBRL International - UK reference site
 

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Replies (19)

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By Cantankerous
04th Mar 2010 10:44

Seahorse for small businesses

Hi, 

I produce my accounts as a word document, looking at the CoreFiling Seahorse product it seems to be the simplest solution (just tagging my existing accounts) but do you know if it will be available to small businesses or will it just be offered to accounting firms. Will I need to go to an accounting firm or will I be able to us it myself?

rgds/alex

OpenYourDiary.com
Online Appointment Booking for Small Businesses

Thanks (0)
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By User deleted
04th Mar 2010 11:10

Beware of Tagging Products

Much is being said about 'minimum tagging' for a set of accounts, yet this is only a temporary state, full tagging (over 5000 items) becomes mandatory from 2013. 

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By cmerritt42
04th Mar 2010 11:20

Seahorse will be available to small businesses/end users
Yes, Seahorse will be available to end-users.

For further reading about iXBRL in general, please have a look at our
articles at blogs.corefiling.com/.

Regards
Cristen Merritt, CoreFiling.

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By plega
04th Mar 2010 11:24

Minimum tagging
Don't be too frightened by that "5,000" figure. You will still be expected to tag only those concepts which appear in your accounts. For a small company, this may only amount to 200 or so items to tag.

Philip Allen

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By Paul Soper
04th Mar 2010 11:35

iXBRL and XBRL

Going round to different firms, both large and small, with in-house tax updates, when they began to realise that HMRC was going to make this mandatory I found a lot of confusion and resentment.  So I dug into the details of XBRL and discovered that it is extensively used as a financial analysis tool in the states, has now been adopted by the SEC, has been used extensively in the Peoples Republic of China as well, and although it's use in accounts submission is clear from the perspective of the regulatory body, it seems that businesses have in the main adopted it as a financial tool first and then submitted using it as well.  Of course in the UK HMRC go about this the wrong way - here it is, it's going to be mandatory, so get used to it, etc etc - surely it would have made more sense to say here is a grewat financial analysis tool which you can adopt and get significant benefits from, oh, and by the way, when your're used to using it you can submit accounts using it (I believe UK Companies House has been accepting this on a voluntary basis since 2006?) and use it for tax return compliance.

More details from here (and no I don't get a commission!): http://www.xbrl.org/Home/ and http://www.xbrl.org/uk/ and then http://www.xbrlplanet.org/planet/snapshot.php?iso3166=gb&FeedID=38&gmapID=1

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By springacweb
04th Mar 2010 12:16

Using HMRC CT online filing

I atempted to use HMRC's online CT filing software last month. An enormous Pdf file which caused my computer to crash. I downloaded as required the latest version of Adobe to run the software and after some four hours to complete the fields for a simple owner manged company, current year plus comparatives and all the statutory accounts notes the sytem would not file the form. I finally gave up and posted the Return, computations and accounts.  This system is unworkable.   

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By daveforbes
08th Mar 2010 11:29

Post production tagging

I think 200 tags (or 400 including comparatives) is not far off from our experience. Whether picking your those from list of 1200 or 5000 does not make that much difference.

However - I would not underestimate how time consuming post production tagging can be. If your AP software is producing ready tagged data this clearly the most efficient.  Unlike our AP software that takes a TB and produces a fully tagged set of accounts, our post production tagging software is currently only available via an offshore outsourcing operation.

Post production tagging software can be quite clever, but if it were good enough to fully automate the process it would surely remove the need for XBRL submission in the first place and we all be able to send in pdfs !

Further info on products is available from HMRC website http://www.hmrc.gov.uk/efiling/ctsoft_dev.htm

David Forbes

Forbes Computer Systems Ltd

 

 

 

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By User deleted
08th Mar 2010 11:55

De-Mystifying ???????

Call me a technological dinosaur but I came to this page following a link that said something like "XBRL de-mystified". What do I find in the third paragraph ........ "Based on XML (eXtensible Mark-up Language), XBRL is similar to the HTML tags that is used to define web page layouts. Rather than defining formatting options such as <title> or <font> , XBRL tags have been extended to cover common financial data elements such as <ifrs-gpAssetsHeldSale> and <ifrs-gp:CurrentTaxReceivables>."

Frankly if this sort of techno-babble is meant to de-mystify the subject then God help us if somebody should try to make it difficult!  

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By daveforbes
08th Mar 2010 12:22

Level of information

It would be a short article if it just said tick the "use XBRL" option in your software

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By vtsoftware
08th Mar 2010 12:52

Simple explanation of iXBRL

The explanation of iXBRL at http://www.vtsoftware.co.uk/support/on-linefiling.htm is a little simpler.

Philip Hodgson

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Simon Hurst
By Simon Hurst
08th Mar 2010 19:54

Another attempt at a 'simple' explanation

I attempted a simple explanation over at IT Counts involving the Rolling Stones. Failing this, there's a much older explanation based on Liz Hurley's socks.

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By User deleted
09th Mar 2010 07:49

hmrc ct600 online

I tried this for a small investment company and after much time with a lengthy and difficult to navigate system filed the return with accounts and computations (that only needed a few lines). It was not possible to enter management expenses(as done in previous years) in the input screens for accounts and computations although there is a box on the ct600 and these showed as trading losses. Hmrc online(tardy and unhelpful helpdesk)did not appear to recognise the problem and advised adding a note(that needed pdf and said there was a free download for this??) and the 'local'office suggested writing in separately in the old fashioned way to mention the point. I did the latter and asked for acknowledgement that the return was accepted but do not hold much hope of a reply, at least not in the short term. Hopefully they will have improved the system by next year?

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By User deleted
09th Mar 2010 09:05

An iXBRL enabled version of VT Final Accounts will be released i

As a VT user I am very dissapointed.  March 2011 is too late. VT needs to get its act together and release the new version this year!

Otherwise it means that we have to wait for the new version of VT final accounts for all accounting year ending before March 2011, ie say Oct, Nov Dec 2009, onwards ( where CT 600 will be filed online after March 2010)  before we can prepare the accounts.

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By User deleted
09th Mar 2010 09:10

VT

Regarding my previous post.

I ment to say 'ie say Oct, Nov, Dec 2010, onwards,' not 2009.

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By vtsoftware
09th Mar 2010 13:31

VT

In view of the above comments, we have brought our release date forward to December 2010.

Philip Hodgson
VT Software

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By User deleted
10th Mar 2010 08:11

Philip Hodgson-Vt software

As VT user, this is an importnat question for me.

Say we have prepared a set of accounts in October 2010. Then when VT has released the IXBRL version in December 2010, am i correct that we update our Vt software ( as we do annually when you release the latest version) and then when we go back and produce the above October 2010 accounts again, they will be IXBRl version?

Or will we have to start a new workbook form scratch in the new version of VT and input all the data again?

Its practical points like these have you need to metion on your website.

Look forward to your response?

 

 

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By vtsoftware
10th Mar 2010 10:53

From VT to Anonymous

You will need to start a new workbook, or alternatively select the tag for each cell from a list (which would be very time consuming).

You can now copy all the data in one go from an old workbook to a new one using the Copy Accounts Data and Paste Accounts Data commands, so this should not be a problem. Click here for more info on this.

I must get on with writing the iXBRL code now. Bye...

Philip Hodgson
VT Software

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By daveforbes
16th Apr 2010 13:26

Sage release date

I thought Sage were planning to release the iXBRL accounts in July 2010.

http://www.xbrlwithsage.com/pdf/company_statement.pdf seems to say November 2010.

Is this a change or was I mistaken ?

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By sandeepjohn
02nd Sep 2011 08:46

You could always outsource your work.

At DataTracks, we offer a pay-as-you-go web based service to convert your financial statements and tax computations to the iXBRL format.

Do visit www.datatracks.co.uk for more information.

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