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Suppliers winning iXBRL battle

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30th Jun 2010
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The majority of Corporation Tax suppliers are ahead of schedule on their iXBRL projects according to HMRC's Julian Hatt.

“Confidence is timetables is greater and some of the vendors have gone public with releases earlier than we expected,” he told AccountingWEB.co.uk at the tax department's iXBRL conference at Chelsea football ground in London on Wednesday.

“People have been pleasantly surprised by the range of solutions – not just the number, but the variety too. There are different ways to tackle this challenge.”

Around 500 people attended the event, including a veritable who’s who of the tax and practice software industry including iXBRL pioneer David Forbes; Digita founder Jeremy Rihll on behalf of Thomson Reuters; CCH’s Paul Brace; Andrew Bolton from QMS; and TaxCalc product manager Anne Porter.

Many of the attendees were company accountants who are becoming aware of the implications for their departments. While industry figures typically estimate that around 40% of practitioners use Word and Excel to prepare their accounts, the consensus was that the practice is even more prevalent in business.

Practitioners are more aware of the move to mandatory efiling from next April what’s involved with submitting CT600 returns with accompanying computations and accounts in iXBRL format, explained BTCsoftware’s Rob Ellis. “They are relying on software developers to come through with their solutions,” he said. “But many corporates are in a tailspin.”

Rihll agreed. “Big organisations don’t have the time or budgets to implement CT systems in time for April. They are either letting their accountants do it or going for an outsourced managed solution.”

The iXBRL transition is mainly a tax department project, but reaches further back to affect the entire accounting process, he continued. “Ideally users would want to import a trial balance straight out of a back-end system to accounts production and pump out an iXBRL template for HMRC and Companies House,” he said.

Specifying and implementing end-to-end accounting and tax systems can incur major extra costs and may not be feasible to cater for the current financial year. For this reason suppliers like Thomson Reuters, LexisNexis and Data Tracks – and many accounting practices, including the Big four - have opened iXBRL tagging and filing services to help companies meet their short term guidelines.

With Companies House planning to move towards a common iXBRL standard with HMRC, companies are likely to take accounts production in-house. So software suppliers who previously grumbled about the cost and inconvenience of adapting their systems for iXBRL are now sensing the opportunity to sell more code.

“The number of our corporate clients will treble,” predicted Caseware’s general manager Shez Hammill. “In the past month we’ve already done more new business than in all of last year. And some of our new customers are the kinds of companies you bank with, fill your car up with and shop with.”

According to HMRC’s Hatt, the spread of solutions from outsourcing to tagging services such as CoreFiling’s Seahorse and integrated tax/accounts production systems from the likes of IRIS, Sage and Digita means that firms can put in a short term solution for the first year or two and then opt for a more sophisticated arrangement further down the line.

But Rob Ellis from BTC urged prospective software buyers to beware of tagging. “Once you go back to the point where you can generate iXBRL final accounts, the big headache goes away. There are a lot of products that will do that, including VT Accounts [the main final accounts program to which BTC’s system connects].

HMRC’s decision to make electronic filing of CT600s mandatory from next April – with the computations and accounts in iXBRL – has imposed a major burden on business and provoked numerous muttered complaints from both delegates and exhibitors at the iXBRL event. Aside from the sales opportunity it provided, some of the software companies anticipated some positive changes not just for the tax department, but for accountants in business and practice.

“HMRC are effectively spreading this technology for their own purposes,” commented IRIS senior product manager Simon Witkiss. “Now people are getting to grips with it, we’ll see XBRL go back to its roots and I think we’ll see more end to end solutions come about.”

Jeremy Rhill commented that mandation was brilliant for innovation. “It’s been done before and it will happen again,” he said. “Self Assessment gave Digita its big break and I expect to see similar innovation now. In the next 2-3 years I think we’ll see some of these new systems go a long way. That’s good for the market.”

XBRL-based electronic filing is a very attractive strategy for the government because it removes manual intervention, he explained. “There are a lot of savings, just like Self Assessment. They’re basically outsourcing it to the marketplace. As a taxpayer I can see the logic. It delivers a dream that HMRC has coveted for many years – the ability to profile businesses accurately.

“Tagging data will provide a phenomenal ability to analyse business. Obviously that will help the recovery rate, but it will also help Chancellor’s understand how their decisions affect individual businesses.  HMRC is at the leading edge of this and other governments are watching with interest. If they feel it’s been a success here, they will follow very quickly.”

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By metcalr
02nd Jul 2010 06:32

HMRC day - a Supplier's view

Just like to say "Thanks" to HMRC for putting on the exhibition and inviting all suppliers with an interest in iXBRL to come along free of charge.  I have rarely seen such a well attended event and at times (especially during the morning) there was a queue of people at our stall (I thought that manning the stall with 4 people would be enough!)  A large proportion of attendees were armed with Notepads to feed back options to their companies and a few even had a checklist of questions.  Interestingly a lot of the better prepared attendees had a printed copy of the HMRC Recognised software suppliers list and were making a bee-line for those names (yes, including us!) who were on the list. 

 

-- www.arkksolutions.com

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