Transcript Title 36pt Arial regular one or two lines

Practical Experiences in the UK of
Introducing XBRL for Taxation to the
Business Community
Jeff Smith
HM Revenue & Customs
Business Customer Unit
Today’s agenda
•
Some background – what we are doing and why.
•
Current progress towards our target date of 2011.
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Inline XBRL (iXBRL)
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E-filing & iXBRL impact and issues for companies and accountants.
•
XBRL benefits to HMRC and to UK companies.
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Other current XBRL issues – not HMRC specific.
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Background – what & why
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HMRC aiming for universal electronic filing of tax returns by
businesses and IT literate individuals by 2012
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Independent review made recommendations for
Company Tax Return filing
• All companies should be
required to file their company
tax returns online, using XBRL,
and make payments
electronically, for returns due
after 31 March 2011
• HMRC should continue to work
with Companies House to
provide a joint filing facility by
2011
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The basic requirement – e-filing a 3 part Tax Return
1. Return form (CT600) - XML
2. Accounts - iXBRL
3. Tax Computations - iXBRL
CT600 Form
Statutory Accounts
Computation
Need ALL three components to make
up a valid return.
No standard layout or content
• full accounts as submitted to
Companies House – not limited to
specific financial data items.
• Tax computation may be anything
from two pages to one hundred
pages +.
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Current progress
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Current progress
•
262,539 CT600 Company Tax Returns were received online (but NOT using
iXBRL) in the period from 6 April 2008 to 31 March 2009. 1,295,228 Returns
were received on paper in the same period
•
CT600 Company Tax Returns received online to 31 March 2009 accounted
for 16.85% of the total number of CT600s received in that period
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1,364,869 companies have registered to use the CT online service
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20,469 agents had registered to use the CT online service at 31 March 2009
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April 2008: 111,891 paper returns / 14,551 online (11.5%)
April 2009: 64,641 paper returns / 23,717 online (26.8%)
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iXBRL service - Implementation Timeline
• Test Services available in April 2009 – for tax software
developers.
• Main legislation already in place – with further
regulations published in May/June 2009 for public
consultation and enactment in Autumn 2009.
• New CT Online Service (iXBRL) released Autumn 2009
• HMRC CT Online product launch in Autumn 2009
• Mandation of online filing and electronic payment for all
CT returns using XBRL standard - April 2011
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Inline XBRL (iXBRL)
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Why Inline XBRL [iXBRL]?
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HMRC’s strategic solution for rendering of accounts and CT
computations – the CT600 will remain as XML
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Follows the XBRL International Standards Board’s approval, on 2 July 2008, of
the iXBRL Rendering Specification
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Previous solution – stylesheets – proved to be very difficult to create
and amend, even for simple accounts. Fixed formatting and
presentation would be unwelcome by many companies.
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iXBRL preserves all presentational aspects – branding, formatting,
terminology – HMRC’s Inspectors see exactly what companies and
agents send.
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Use of XHTML allows XBRL tagging only as required – has greatly
simplified tagging of the tax computation.
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Inline XBRL [iXBRL]
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Software developers regard iXBRL as a very good solution
– Proving easy to implement, even with little or no previous
experience of HTML/XHTML.
– Little demand for a stylesheet based solution!
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E-filing & iXBRL impact and issues for companies and
accountants
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XBRL impact on smaller UK companies
(98% of the total)
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HMRC building a free software product that will enable smallest
companies to e-file a Company Tax Return – using a standard layout
and content for accounts and tax computations.
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Virtually all accounts are produced by an accountancy firm on behalf
of the company and are audited by the same firm.
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Accountants use accounts production software – and most software
companies are aware of XBRL and are enhancing their products in
time for 2011 – but unclear when all products will be on the market.
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Tax software almost universally used – products are expected to be
iXBRL ready and general acceptance that not a problem.
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Accounts production is the challenge for very large
UK companies – probably our main concern
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Sophisticated ERP and underlying systems create management and
consolidated accounts.
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‘Statutory Accounts’ (those required by UK Company Law for
submission to company regulator and HMRC) are often seen as an
overhead for internal tax departments to deal with.
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Statutory Accounts production is largely a manual process and Word
or Excel based – this is almost always the case even in the largest
multi-national companies.
–
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Looking at possibility of allowing a reduced set of tags (c 1200) to be used for an
interim period before requiring full accounts tagging.
Tax departments responsible for a large group of companies may
have to prepare 500 Company Tax Returns – and 500 sets of
Statutory Accounts and tax computations.
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Accounts production is the barrier for very large UK
companies – probably our main concern (2)
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Companies generally were unwilling to think about 2011
requirements when mandatory e-filing using XBRL was announced
in 2006.
–
We are raising awareness – e.g. recent letters to Finance Directors and Tax Directors have
made an impact.
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Many large companies are telling us that they have just about enough time to plan and
prepare – but others are uncomfortable.
Key factors:
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Software products - becoming available all the time – with varying
degrees of sophistication and cost.
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Joint approach with Companies House – expect to be clarified soon.
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XBRL - benefits
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HMRC benefits
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HMRC will use iXBRL-tagged data to:
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Improve risk profiling and reduce the administrative burden, especially on compliant
companies
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Improve financial modelling – used to provide Government with an assessment of
the impact and cost of potential changes to tax policy and specific tax proposals
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Conduct more effective ‘interventions’ with fewer requests for information from
companies or their agents that can be analysed from iXBRL submissions
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Provides the basis for future improvements in financial reporting and financial
reporting processes generally – whilst using an international and financial industrywide standard
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It’s not just
about tax!
Customer reactions & benefits
Companies generally slow to recognise the wider benefits of XBRL
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Automated exchange of data between systems
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Improved business processes
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Improved usability of financial reports
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Increased data quality
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Lower costs of data capture
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Flexible, extensible and comprehensive data collection
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Reuse of data
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Freeing up of resources for data analysis
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Reduction in time to publish data
Companies are often in the very early stages of understanding what
XBRL may mean to them and in recognising that the time is right
when they have other priorities and economic challenges.
But already finding acceptance of the potential to streamline and
integrate internal financial systems and to consider longer term
benefits.
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Other current issues
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Other current issues or influences
– not HMRC specific!
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Impact of XBRL on audit and assurance processes and standards.
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Under consideration by the Institute of Chartered Accountants in
England & Wales.
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Taxonomy ownership and long term maintenance.
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Coverage of IFRS taxonomy
–
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UK extensions being created by XBRL UK Ltd.
How/when XBRL might be extended to other aspects of UK and EU
financial reporting.
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Contact details
Jeff Smith
[email protected]
+441952 294048
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