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FreeAgent Central embraces XBRL

13th Oct 2010
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Having picked up the 2010 Software Satisfaction Award for small business accounting software last Thursday, FreeAgent revealed plans to reconstruct its accounting engine around the XBRL data exchange standard  - the basis for the iXBRL electronic filing format used by HMRC and Companies House.

“We rewrite our engine every couple of years,” FreeAgent Central founder and CEO Ed Molyneux told “Using iXBRL will mean that we can structure the accounts within the application so that they will come out with the correct tags for final accounts and tax filing purposes.”

FreeAgent differentiates itself from other applications with an on-screen “tax timeline” that shows the user what their outsanding tax liabilities and overall cashflow are. Molyneux explained that it was vital to retain this important feature through the re-engineering process.

Accountant users of FreeAgent want a more flexible chart of accounts would, but divorcing the categorisations from their accounting and tax implications would undermine the live tax projections.  In theory, basing the application’s internal accounting codes on XBRL will make it possible to link the timeline to the actual data elements that are calculated by HMRC, Molyneux said.

“If you can create a line in the chart of accounts and relate it to a tag in the HMRC iXBRL taxonomy, it will come out in the right place at the other end,” he said.

The approach will have benefits for sole traders as well as limited company users of FreeAgent, he said. By choosing a different configuration option, the reconfigured software engine will make it possible to link a sole trader’s accounts entries to the boxes on their Self Assessment return.

FreeAgent Central was designed as an accounting solution for freelancers and small businesses and will remain so.

“We don’t want to write a full blow accounts production, but to integrate our users better with accountants and regulators,” Molyneux said. “People may eventually outgrow us, but the new accounting engine will make it easier for the application to grow with them.”

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