There's more to iXBRL than Corporation Tax data tags. It could change the way your whole firm works, argue Tim Good and Giles Mooney.
There will be few in the accounting world who remain unaware that the submission of company accounts and tax returns will fundamentally change from April 2011. For many, this requirement will be seen as an additional overhead which will squeeze the margins of the hard working practitioner. For some, however, it brings an opportunity to increase efficiency and create a competitive advantage over rival firms.
All accounts and computations for periods ending after 31 March 2010, filed from 1 April 11 must be sent to HMRC in iXBRL format. In essence, this requires the final accounts to have electronic data tags embedded that categorise the transactions and disclosures being made.
Many commentators are becoming obsessed with the detailed ins and outs of iXBRL so that practitioners feel they need to approach the topic in the same way. But you don’t need a detailed technical understanding of iXBRL. In a way, it’s similar to HTML – you don’t need to know how it works to use the internet!
In most cases, advisers will have to acquire additional or amended software and their biggest challenge will be deciding what sort of system to buy.
They can either bolt on additional products to tag accounts or use an integrated software system.
There are a number of cost and efficiency reasons why producing accounts using existing software systems (Excel and Word in many cases) and then running an additional package on top will make less sense than using an accounts package with integrated iXBRL software. Integrated software produces accounts with the tagging automatically embedded. This is not only quicker but also reduces the need for the practice accountant and their staff to understand the ins and outs of iXBRL formatting.
Where it is worth paying attention to iXBRL is from the wider perspective of practice workflows and procedures. Rather than viewing the transition to the efiling new regime as a problem, why not turn the threat into an opportunity?
Firms are going to have to adopt the new technology. When doing so, they can opt to continue with the systems they have to minimise disruption, or they can do something brand new. It could be more costly and difficult at the outset, but will deliver better returns in the long run.
By standardising on iXBRL, HMRC has created the opportunity for practitioners to integrate their systems so that data flows seamlessly all the way to their Corporation Tax software, through their accounts software, and even from their clients’ bookkeeping software.
For many firms, iXBRL will increase costs and decrease efficiency. But looking to the future and anticipating new ways of working with both HMRC and clients could achieve precisely the opposite. The first step for practitioners is to look around the software market and ask providers how easily their products link with their existing accounts and tax products, whether they link into their clients’ bookkeeping systems and what the cost of getting from initial data entry to filing will be.
About the authors
Tim Good and Giles Mooney are the owners of Absolute Accounting Software, directors of PTP Limited and are the presenters of TAXtv. Click here for a preview of the latest edition and details of how to subscribe to the service.
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