SETTING THE SCENE

Dr Paul Booth Technical & Development Manager, IT Faculty

The story so far

• • • • XBRL is all about tagging … but the tags are electronic A bit like a bar code … for financial reporting concepts

A bit like a bar code …

• But instead of tagging a tin of beans • … we’re tagging an item in a set of accounts

But what’s this ‘i’?

• • • iXBRL =

Inline

eXtensible Business Reporting Language It’s still XBRL – same tags etc … but the ‘i’ bit means that human eyes can read it too

Lots of applications of XBRL

• • • … but it’s HMRC’s impending requirement that is concentrating minds.

CT filings submitted after 31 March 2011 for year-ends after 31 March 2010 must be done online, using iXBRL for – Accounts – Computations Today we’re focusing mainly on the accounts. The tax computations bit is relatively straightforward.

How do we make the iXBRL?

• • • • Wide range of methods But many software products not yet publicly available … in some cases, even though they are ‘recognised’ by HMRC Which method is best depends on circumstances: who you are, what you do, existing methodology, business priorities, etc.

Year-end Accounts Production and Filing Bookkeeping Year-end accounts Filing

Some scenarios …

… but they come with a health warning I’m not necessarily describing anyone who’s here … and not pretending to be comprehensive

The ‘best’ solution for your practice/business could depend on many factors

Scenario 1: just one simple filing

• One single, simple business. Just one filing per year. (Or possibly a practice with a very small number of client filings.) • • • Possible solution: HMRC’s free product Likely Does the whole filing: accounts, comps, CT600 But it’s limited: suitable only for ‘smaller companies … with less complex tax affairs A bit slow and clunky.

HMRC’s free product

Type into a form Bookkeeping Year-end accounts iXBRL filing Incl.CT600 and comps Filing

Scenario 2: already using AP software • Practice doing filings for several clients and using established accounts production software product.

Possible solution: Use your AP supplier’s iXBRL enabled product • • • For many sets of accounts, could be as simple as clicking the new ‘iXBRL output’ button.

But make sure your supplier is releasing an upgrade, and on time.

Accounts that depart from standard template may need extra work.

Accounts Production Software

…and iXBRL file Bookkeeping + other adjustments and inputs Year-end accounts Software adds XBRL tags Filing

Scenario 3: currently use Word/Excel

• Practice with several clients, or business with several subsidiaries – multiple filings to do • • Possible solution (a): get iXBRL-enabled AP software May be more efficient in the long term But significant change to existing processes

Scenario 3: currently use Word/Excel

• Practice with several clients, or business with several subsidiaries – multiple filings to do • • • Possible solution (b): use post-production converter/tagger or outsourced iXBRL service No disruption to your existing processes But you have an extra task at the end of those processes … or you have an extra expense and supplier to manage

Post-production tagging

Bookkeeping …and outputs iXBRL file Year-end accounts Filing Software adds XBRL tags

• Scenario 4: currently do both book keeping and accounts prep/tax filing … whether in business or in practice Possible solution: use ‘end-to-end’ software that • • Probably the greatest potential efficiency gains But probably the biggest disruption to existing processes

‘End to end’ software

Bookkeeping …and outputs iXBRL file Year-end accounts Single software product does both bookkeeping and AP Filing

Scenario 5: currently do tax filings but not final accounts preparation • … taking the final accounts as a ‘given’, from the client or from client’s other adviser Possible solutions (a) get A N Other to supply an use post-production converter or outsource • • Not necessarily your problem Make sure you are given the correct accounts

The ‘soft landing’

• HMRC say ‘sympathetic approach’ to penalties in first two years – – Reasonable Excuse Reasonable Care • In the first two years, we can use a smaller ‘dictionary’ of tags – Not everything in accounts will need to be tagged.

Don’t panic!

Further information available • • • XBRL page: www.icaew.com/xbrl HMRC’s ‘recognised’ list: www.hmrc.gov.uk/efiling/ctsoft_dev.htm

Implementing XBRL

publication soon on www.ion.icaew.com/itcounts Paul Booth IT Faculty 020 7920 8476 [email protected]