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:

  1. 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.
  2. 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.
  3. 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.
  4. 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.

The iXBRL tagging process

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.

TAGGING TOOLS
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

Comments

VT

vtsoftware | | Permalink

VT's tagging product (due for release 31 January) is missing from the above list.

Using VT, accounts can be tagged up extremely quickly using a dialog that contains the outline of a set of accounts (see screenshot). Just double click on the cell you want to tag, then double click on the matching item in the dialog. In a trial, we tagged up a small company set of accounts in 20 minutes.

For anyone who already has a set of small company accounts in Excel, this is almost certainly the cheapest and quickest way of generating an iXBRL file. There is no need to transfer your data to an accounts production package.

I should add that the pre-formatted workbooks contained in VT Final Accounts are pre-tagged. If you use these, there is no need to do any tagging at all.

VT can be used with accounts for any size of company, but complicated accounts can take a lot longer to tag.

Philip Hodgson
VT Software

deadlines for IXBRL

david5541 | | Permalink

what john stokdyk of tax technology(who are no doubt selling their own ixbrl product) fails to enlight readers on is that the obligation to use ixbrl as far as HMRC is concerned is not compulory until accounting periods for compnaies end AFTER 31 March 2010.

 

And also HMRC have already indicated and admit they will struggle with full implementation on 1 April 2010 even though filing by ixbrl is compulsory from this date for periods ending after this date.

 

any more comments from readers?

as against sellers/salesmen?

John Stokdyk's picture

Date error - deadline applies to year ends after 31 March 2010

John Stokdyk | | Permalink

Thank you very much for pointing out my error David. When I was typing the article out, my brain appears to have failed to register the turn of the new year and I thought I was still in 2010. (I notice that you too, David, made the same mistake in your penultimate paragraph - implementation date is in 2011).

All the same, many, many apologies to anyone who might have been misled by the error, which has now been corrected in the text. Mistakes aside, I'd just like to point out that I'm the editor of AccountingWEB.co.uk and main technology correspondent - not a representative of any individual devloper.

The "tax technology" links you see at the top of the page are the topic pages on which this guide appears - not a coroporate identity. I'm sorry if this caused any confusion and apart from the initial date error, I hope this guide does not give any appearance of favouring one solution over the other. But if you are not planning to use HMRC's own online software tool to file your Corporation Tax return, you are going to need some mechanism to do so after 1 April this year.

The point of this guide and previous installments looking at different options for separate CT solutions and integrated accounts production/CT systems is to make AccountingWEB.co.uk members aware of the impending deadline and to give them an idea of what's available. Next week will see yet another article on iXBRL outsourcing services. You can monitor all the latest developments on our dedicated iXBRL pages.

John Stokdyk's picture

@VTsoftware - clarification

John Stokdyk | | Permalink

Thank you for your comment and the update on progress for your VT Accounts tool, Philip. We'll be very keen to have a look and report on it when it's ready.

I just wanted to point out that it wasn't included in this list because as I understand it from your website and previous discussions, VT Accounts is an Excel-based accounts production program rather than a post-final accounts tagging tool.

As this article states at the beginning, building iXBRL into the accounts as you produce them is far more efficient than tagging. This guide is part of a sequence that is working through the different iXBRL options (CT efiling software, integrated accounts production, tagging tools and managed services). You'll find that VT Accounts was covered in our guide to integrated accounts production/CT tools (in tandem with BTCSoftware), with an expected due date of late January.

Good luck with the final touches - from rumours currently circulating, it appears that some vendors are struggling to hit their release schedules...

@John re VT

vtsoftware | | Permalink

The iXBRL features in VT Final Accounts apply to both our own pre-tagged workbooks and to any custom set of accounts in any Excel workbook. Hence VT Final Accounts is both an accounts production tool and a post-production tagging tool, all in the same package.

This change in role has only been up on our website since just before Christmas. We needed to build in the self tagging features so that users could customise the VT workbooks and it was only a little more work to make the self tagging features apply to any workbook.

The point I was also trying to make was that with VT it is very quick to tag up a simple set of accounts in Excel. If you have already done your own thing in Excel, especially if you have a single template from which you derive all your accounts, then self tagging may well be the most efficient way forward.

The equation changes the larger the company. For large private companies including a cash flow self tagging is starting to get a bit onerous and an accounts production package is probably the best way forward.

For a plc I would imagine self tagging would be a nightmare, but then so would be trying to make an accounts production package produce accounts to the desired format.

Philip Hodgson
VT Software

Can I autotag file and forget with tagging tools

Cantankerous | | Permalink

John, 

With the HMRC soft landing, do we need to bother learning anything about iXBRL for the next couple of years or can we just quickly run our accounts through one of the automated tagging tools, accept all of the suggestions and file the accounts?

As long as the iXBRL passes the Joint Filing Common Validation Checks (http://www.hmrc.gov.uk/ebu/ct_techpack/joint_filing_validation_checks.pdf) which I assume all of these tools test for, do we need to check each tag or does the soft landing give us a get out clause? 

If we can just auto tag, file and forget, this would be a matter of minutes rather than an hour or two per set of accounts, quite a saving. 

What do you think.

Alex

iXBRLForum.com

Tagging tools

johnrobinson25 | | Permalink

 Very informative and comprehensive post regarding tagging tools and software. I've found that getting up to speed with tagging software can sometimes be very time consuming. For a relatively small practice like mine,  I have personally benefited by using an accounts production software like CaseWare in combination with an outsourced provider like DataTracks for my accounts prepared in Word.