Your next annual set of accounts, together with your CT600 and computations, may well need to be filed online using a radically new data format. Are you ready?
As discussed in the first article on the IT and tax faculties joint 'Demystifying XBRL' event, corporation tax information will need to be filed in iXBRL format from 1 April 2011. Having previously covered the technical background of iXBRL, this time we'll look at the other three sessions:
- Anita Monteith (Tax faculty ICAEW) – The use of iXBRL in tax and the new corporation tax filing rules (PowerPoint slides)
- Jen Little (HMRC Online Carter Programme) – HMRC perspective: how they are going to use the information and how it will benefit the business world (PowerPoint slides)
- John Turner (CoreFiling) – iXBRL online tagging software demonstration
As well as highlighting the many ways in which the tax faculty had been working with HMRC to ensure a smooth transition to the new filing regime, Anita Monteith also ran through some good, practical advice on how to prepare. She suggested:
- The appointment of someone to be responsible for managing the transition
- Early registration on the HMRC site (remembering that the PIN is sent by post so the registration process takes a week or so)
- Investigation of the HMRC online filing site and how it works
Anita also highlighted the importance of the 'soft landing' – a two year period during which HMRC has agreed that 'anyone who has tried to comply, but failed, will not be penalised'.
In terms of the actual mechanics of generating the return, computation and accounts in the required format, Anita covered three possibilities:
- The use of proprietary software, both for tax and accounts production – in which case the onus is on the software suppliers to build in the necessary facilities in time for the deadline but some effort is likely to be needed on behalf of the user, particularly in tagging accounts items;
- The use of Word, Excel or paper – the final session of the event would cover one possible solution for Word and Excel users;
- The use of HMRC's free product based on Adobe PDF technology, which operates as a downloadable form with supplementary pages. As the HMRC guide to the product makes clear, it "is aimed at small companies and organisations with straightforward affairs."
Jen Little admitted that there would be significant benefits for HMRC itself – including reduced processing costs and the easier collection of more, better data. She also pointed out that, not only would efficiencies for HMRC also benefit all of us as taxpayers, but that there would be direct benefits for corporation tax paying businesses:
- Online filing is 'secure, speedy and certain'
- Better data and smarter use of data could lead to 'less intervention for low risk businesses' and quicker and more targeted enquiries
- Better data could promote improved tax policy making.
Jen also provided the address of the HMRC web page that gives the up-to-date position on which suppliers have obtained HMRC recognition for iXBRL components of their software.
As mentioned above, where users of proprietary software will rely on their suppliers to sort out the requirements of iXBRL and smaller organisations may be able to use the HMRC form-based product, those using Word and Excel to produce accounts would seem to have a significant problem. John Turner CEO of CoreFiling demonstrated their 'Seahorse' product. Provided as a web service, Seahorse allows a set of accounts produced as a Word document or Excel spreadsheet to be uploaded to a secure host system online. The content is then scanned for 'clues' as to how XBRL tags should be applied to particular items. These tags are graded using a 'traffic lights' type colour system to show the degree of confidence and can then be reviewed and altered on-screen as required. Once tagged, documents can be edited in Word and Excel before being re-submitted to Seahorse to complete the tagging process.
It remains to be seen how much Seahorse will cost, but it would certainly seem to provide an elegant and relatively straightforward solution to the problem of converting Word and Excel content for iXBRL filing.
In the first article we used the analogy of a music collection in the explanation of how the XBRL taxonomy works. Neatly, there is another music echo in the way that Seahorse brings intelligence to its tagging process. It uses 'crowd tagging' – the ability to learn from other, previously submitted, examples to improve the accuracy of the initial tagging process for a new document. A bit like when you put a music CD into a PC and the media player software is able to recognise it by matching it to a CD with the same characteristics that has already been added to its database by a previous user somewhere in the world.
For more information on CoreFiling's Seahorse product have a look at: http://www.corefiling.com/products/seahorse.html