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Concern mounts over iXBRL deadline

Tax bodies call for delay to statutory requirement

Tax experts throughout the country have expressed deep concern about HMRC’s plan to go ahead with requirements for UK companies to submit statutory accounts in iXBRL from 1 April 2011, in spite of necessary software not being fully available.

It has also been highlighted that some compliant programs deal with only 80% to 90% of iXBRL tagging – with the rest having to be carried out manually –because the software is geared to accounts that fit a standard format, whereas accounts are regularly adapted to suit the business they serve.

Paul Aplin OBE of AC Mole & Co provided an illustration: if a firm of accountants were to have 400 company clients, manually tagging just 10% could take a member of staff up to two hours.

Quite apart from needing the resources, how would the accountancy recoup the cost, he asked. Small-trader clients would not be happy about paying extra fees to cover the cost, so the accountancy may end up having to absorb the expense.

Mr Aplin demanded that the Revenue provide ‘absolute clarity’ with regards to ‘the minimum amount of tagging that they will accept: what will constitute a valid return, and how the department will treat accountants whose suppliers have failed to produce iXBRL compliant software by the 1 April deadline’.

Grant Thornton’s Francesca Lagerberg said the situation ’takes you back to the principles found in the Carter report on e-filing. If HMRC are going to implement IT changes, there needs to be adequate time to test, run a pilot scheme and ensure all is ready.

‘In Carter, the key was for third parties to have the time to be ready for the changes and not all will be ready. If those same principles can be applied across all tax related projects it may save people a lot of time and anxiety,’ said Ms Lagerberg.

Tax-related professional bodies – the Association of Accounting Technicians, the Association of Chartered Certified Accountants, the Association of Taxation Technicians, the Chartered Institute of Taxation, the Institute of Chartered Accountants in England and Wales (Tax Faculty), and the Institute of Chartered Accountants of Scotland – have sent a joint letter to the Exchequer secretary to the Treasury, David Gauke, calling for a review of the timetable for iXBRL-based company tax-filing.

The letter warns that many companies and tax agents may not be able to take delivery of the necessary software by the statutory deadline, and would not have time to install and run tests, and familiarise employees with the complexity of the data-tagging that iXBRL entails.

The tax organisations have asked for early legislation to change the implementation plan. They have recommended that companies should be allowed to file their accounts in either iXBRL or the alternative PDF for at least six months from 1 April, followed by a further year in which iXBRL tagging requirements would be cut back from the proposed ‘minimum tagging’ to a reduced level.

The assistant director of tax at the Institute of Chartered Accountants of Scotland, chartered IT professional Donald Drysdale, said that although most of the institute’s members support online tax filing, they are ‘concerned about HMRC’s insistence on using iXBRL, which has never been properly tried and tested on any other project of this scale’.

The success of iXBRL was dependent on software suppliers bringing new products to market, which presented big challenges, and ‘some key players have failed to deliver their iXBRL-based accounts preparation solutions in adequate time before 1 April’, said Mr Drysdale.

He added that accountants who have installed the necessary software have expressed concerns about ‘the time and effort they are finding they have to devote to expensive manual tagging’.

HMRC must provide ‘clear guidance to all those who are facing difficulties because of non-delivery or late delivery of software,’ and ‘understand the unacceptable level of doubt, confusion and cost being imposed on the business community, which is contrary to the government’s stated aim of reducing the level of administrative burdens on business’.

Mr Drysdale’s comments were echoed by Anthony Thomas, deputy president of the Chartered Institute of Taxation (CIOT), who said, ‘With only two months until the planned mandatory implementation of iXBRL online filing, our members and other businesses are facing implementation problems. Two substantial providers of accounts preparation software have failed to deliver their iXBRL-enabled software products’.

Mr Thomas suggested that, while CIOT members have embraced online filing and are happy with filing in iXBRL for the tax computations, ‘business is not ready for filing statutory accounts in iXBRL at this stage’. He said that, if HMRC persist in proceeding with making iXBRL mandatory for accounts from 1 April, small to medium-sized businesses and their agents ‘will be hit the hardest’.

According to the CIOT, the Revenue has indicated for more than one year that it would seek to amend mandation if software was not ready and working.

Mr Thomas concluded, ‘We are at that stage now, and amendment to the plans should take place by allowing submission of statutory accounts in PDF after 1 April 2011 until the situation becomes significantly clearer.’

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