What you need to know about iXBRL tagging
It’s been said before, and we’ll say it again – the most efficient way to create a set of iXBRL-format accounts for filing with HMRC’s Corporation Tax return is to use an accounts production tool that assigns the correct tags when the final accounts are generated.
This is the route most accountancy practices are likely to take and by now accounts preparers should have consulted with the people responsible for filing Corporation Tax returns to ensure that the right systems are in place, the processes for getting the accounts data ready for submission to HMRC have been agreed and that staff have been assigned responsibility and adequately trained for the task
But with the mandatory requirement to file CT returns electronically due to kick in on 1 April for years ending on/after 31 March 2010* (text corrected - see comment below), many companies may not be in a position to go the accounts production route, for a variety of reasons:
- The tools weren’t available to test and put in place before the iXBRL accounts will be required. The switch to automated accounts production is a major undertaking which cannot be rushed.
- The organisation only produces a small number of final accounts each year and cannot justify the expense or disruption of installing specialist accounts production software.
- Complex consolidation processes mean the entity will continue to produce the final accounts in Excel or Word, and they cannot be easily replicated with a commercial accounts production application. Many accountancy firms working with such clients will need to tag up the accounts supplied by clients before submitting them to HMRC as part of the CT600 package.
- Nobody really took much notice of the iXBRL requirement until too late and it is not possible to install a new system in the time available.
If any of these situations apply to your organisation, the options facing you are simple:
- File any statutory accounts due after 1 April 2009 early and submit a paper CT600 pack, or an electronic version with accompanying accounts in PDF.
- Use iXBRL tagging tools to map your final accounts to one of the accepted iXBRL taxonomies (ie UK GAAP or IFRS) and submit the iXBRL final accounts file you produce.
- Use HMRC’s Corporation Tax Online software system to submit your accounts service. Note however that the department advises that it is designed for companies with simple tax affairs.
- Enlist the help of a managed tagging service to do the project for you: this could be done by several of the software suppliers listed here, a specialist outsourcer, or your accountant.
This article looks at the second option – iXBRL tagging software. Drawing on previous research on AccountingWEB.co.uk, information from HRMC’s CT Software pages and the tagging service providers themselves, it will give you an idea of what’s available and what’s involved in the tagging process. If that is not your preferred solution, another guide will be published shortly looking at iXBRL outsourcing providers.
1. Prepare your final accounts and output them in an electronic format, as a PDF, Word, Excel or DTP file
2 Import the final accounts file to a tagging program, either desktop applications like those from TCSL, CCH, IRIS, Digita or Sage. Or use a web-based tool such as Seahorse from Corefiling, or the TaxCalc/Arkk service.
3. Review the iXBRL output file for accuracy and compliance with HMRC’s minimum tagging list and adjust – only if absolutely necessary
4. Submit the iXBRL file to HMRC alongside the CT600 and tax computations iXBRL file. The CT software used to work out the tax liability should be equipped to file online, so all a tax team or adviser would need is the iXBRL accounts file to add into the pack – check that you have all ingredients in place.
Source: Company accounts HM Revenue & Customs require with a Company Tax Return (32kb PDF)
The software suppliers serving both the business and practice markets are aware of the factors pushing both companies and their accountants towards the tagging option. CCH, Digita (Thomson Reuters), IRIS (including PTP) and Sage - which all offer integrated tax/accounts tools to practitioners – have responded to demand with additional offerings to tag accounts produced in Microsoft Word or Excel, and even DTP packages like Adobe’s InDesign.
“Putting together a set of statutory accounts for a larger company requires a lot of skill and diligence, and finance directors do not like to outsource it,” explained Ernst & Young director Kevin Huby. “Looking at it as a 2-3 year objective, they recognise they will need a tactical solution to comply in year one, and then switch to automated accounts production,” he said.
The tagging process
HMRC has put a lot of effort into explaining what’s required (see right) provides detailed guidance on what it expects. If you are not yet familiar with iXBRL, it is a variant of the eXtensible Business Reporting Language that is embedded within an “inline” HTML file so that the tagged accounts can be viewed in a web browser while the XBRL data can be retrieved by HMRC or other computer systems.
Within iXBRL, accounts data is mapped to a set of codes held in a data library known as a “taxonomy”. Separate taxonomies have been agreed for different jurisdictions and accounting principles, so you can map accounts prepared under UK GAAP or IFRS to the appropriate tags.
During the first couple of years of mandatory efiling, HMRC is operating a “soft landing” policy and has specified around a minimum list of 1,500 items that must be tagged, if present in your accounts. That compares with the 4,000 items in the full standard accounting taxonomies.
Tim Hervey, a business analyst responsible for Sage’s tax software, and Jeremy Rihll from Thomson Reuters advise companies to automate accounts production by the time the minimum tagging list is scrapped, as the extra work involved is likely to increase tagging costs significantly.
If you are tempted to cook up your own iXBRL tagging tool, it is probably not a good idea at this point. Excel expert Simon Hurst experimented with this approach last year and concluded, don’t try this at home. Even using one of the commercial applications listed below, many of which will automate and “learn” the tagging conventions you prefer to apply, manual tagging can be laborious and needs to be reviewed for accuracy before submission.
Accountants can often be very particular about the way their accounts are presented –this was one of the factors that encouraged HMRC to adopt the hybrid iXBRL approach that allows its computers to read the data while you can see an accurate reproduction in a Web browser. But even allowing font and other layout nuances, online filing will push prepares towards much more standard approaches.
Once they’re mapped up and tagged to a particular taxonomy and beamed up to HMRC, all the accounts formats are going to look indistinguishable to the HMRC computers that store and analyse them. There will have to be very significant reasons to depart from the standard taxonomies because of the extra effort and checks the tweaks will require before dispatch.
In a whitepaper discussing iXBRL requirements, CCH points out that companies taking accounts production in house, but relying on their accountants to tag and submit the returns will alter the nature of the engagement. In order to ensure they are not faced with a last-minute crisis when the time comes to submit the Corporation tax return, CCH advises that the two sides need to meet to resolve these issues.
Look to the future
The reason HMRC and Companies House adopted iXBRL was to streamline the collection of accounts data. In HMRC’s case, the XBRL files will help it compare companies against industry benchmarks to focus its risk-based investigations efforts.
Companies and their accountants could be doing similar things too for more beneficial purposes.
The pressure to comply with mandatory filing from the April 2011 deadline has perhaps blinded many organisations – including software developers and tagging service providers - to the opportunities that electronic accounts data will present. Management reporting and business intelligence tools could benefit from automated collection, and the UK could eventually follow the example of the Netherlands, where banks now ask for accounts to accompany loan applications.
As a rule, nominal ledger systems are still outside XBRL’s orbit, so the focus is primarily on bolting the iXBRL output system on to the back of traditional accounts preparation processes. This is likely to change once the bookkeeping software developers (including bigger players such as Sage and IRIS) build XBRL into their accounting programs - as Dutch developer Twinfield is already doing.
HMRC’s adoption of iXBRL is going to have longer-term ramifications for preparers. If you are turning to tagging tools to meet the short term compliance deadline, use the breathing space you gain through this approach to research all of the possibilities that lie ahead.
Another caveat is in not having standards based exports from general ledger systems. A small company may not even be using a General Ledger but may be relying upon non-specialist software (or paper). Where it does have a specialist tool, then the exports are not yet standardised as the mandatory XBRL filing has yet to start.
the issues of linking Accounts Production systems with Corporate Tax Compliance systems. No-one is paying any serious attention yet to moving further back up the sources of information into the transactional systems themselves.
For those organisations whose accounts are beyond what HMRC’s online software can cope with, the tax department maintains a list of recognised suppliers for all categories of CT/accounts and tagging tools. Inclusion on HMRC list is not a definitive requirement for online filing, but is a good indication that the company is committed enough to the task to undergo HMRC’s testing (and somewhat slow-moving) recognisition process. So you would be well advised to start your search from the suppliers here:
- Arkk Solutions – offers a downloadable add-in lets users mark up Excel and Work documents with iXBRL tags without leaving Microsoft Office. It also operates a web-based tagging service in tandem with TaxCalc.
- CCH – the CCH iXBRL Tag & Review Tool allows you to tag accounts which have been prepared using other software and converted to HTML format for viewing within a web browser. Once you have manually tagged a set of accounts, the output will be stored within the tool to speed the completion of subsequent sets of accounts.
- Ez-iXBRL - an integrated XBRL data conversion platform deisgned for the multinational marketplace, Ez-iXBRL has been recognised by HMRC for iXBRL computations and final accounts under both UK-GAAP and UK-IFRS taxonomies.
- IRIS/CoreFiling Seahorse – IRIS has teamed with CoreFiling to offer customers a “predictive” web-based iXBRL tagging system. Files produced with Microsoft Word are uploaded to the site and analysed to identify different sections as P&Ls and balance sheets. Based on a collection of underlying rules built up from previous experience, the software highlights elements for tagging and offers a pull-down menu of suggested XBRL tags. If previous year figures are included, Seahorse can differentiate between current and prior year and tag them accordingly. An Excel edition is in development
- KPMG - the Big Four firm has devised KPMG XME, an iXBRL conversion tool that turns Microsoft Word and Excel documents into iXBRL files ready for submission to HMRC. The program includes a test submission feature to filter out inaccuracies.
- TCSL – Catering for the corporate tax department, the Alphatax CT software developer has also created Alphatag, a program for those who want to continue with their existing final accounts process. Alphatag is a desktop application designed to handle up to 40 sets of accounts. A product demonstration of a relatively complex 22-page set of accounts was automatically tagged in a matter of minutes, with additional prompts for ambiguous items such as third party transactions that might need additional tagging. The system tags the statutory accounts prepared to either the UK GAAP or the UK IFRS accounting standards using the appropriate XBRL taxonomies, and will accept additional user-defined XBRL tag. The software learns from previous choices and applies this knowledge when tagging other companies in the group and later periods.
- Sage - In addition to its integrated CT/accounts production software, Sage offers an iXBRL converter sourced from its Corporation Tax partner Abacus, owned by Thomson Reuters (see below ).
- Thomson Reuters – the Digita and Abacus group is offering users a converter tool that takes files set out in Microsoft Word and converts them into the iXBRL format required by HMRC. It supports both UK GAAP and IFRS taxonomies and includes intelligent rules to remember the decisions made by the user on previous files. The Abacus tool marketed by Thomson Reuters under the ONESOURCE brand to its corporate clients is the same as the one sold to practitioners by Digita.
- UBMatrix – Based on its experience with XBRL filings to the US Securities Exchange Commission, UBmatrix has tools to map Oracle databases to XBRL taxonomies and offers a Microsoft Office Report Builder that is able to prepare inline XBRL filings for HMRC. This option may be available through suppliers of Oracle-based ERP suites such as SAP and Oracle itself, and via the software companies’ resellers. Separate CT software will be needed to produce tax computations and file the CT600 return.
More iXBRL resources
iXBRL coverage and expert guides on AccountingWEB.co.uk
CCH iXBRL website
Digita iXBRL website and whitepaper
IRIS iXBRL whitepaper
Keytime iXBRL guide - everything the practitioner needs to know
Sage iXBRL website and AccountingWEB article Preparing for iXBRL
XBRL International - UK reference site
Also join our new iXBRL discussion group