Understanding iXBRL: Simplifying Financial Reporting for HMRC Compliance

1. SETTING THE SCENE Dr Paul Booth Technical & Development Manager, IT Faculty

2. The story so far • XBRL is all about tagging • … but the tags are electronic • A bit like a bar code • … for financial reporting concepts

3. A bit like a bar code … • But instead of tagging a tin of beans • … we’re tagging an item in a set of accounts

4. 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

5. 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.

6. 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.

7. Year-end Accounts Production and Filing Bookkeeping Year-endaccounts Filing

8. 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

9. 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.

10. HMRC’s free product Type into a form iXBRL filing Incl.CT600 and comps Bookkeeping Year-endaccounts Filing

11. 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 Likely • 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.

12. Accounts Production Software …and iXBRL file Bookkeeping Year-endaccounts Filing Software adds XBRL tags + other adjustments and inputs

13. 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 Likely • May be more efficient in the long term • But significant change to existing processes

14. 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 Likely • 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

15. Post-production tagging …and outputs iXBRL file Bookkeeping Year-endaccounts Filing Software adds XBRL tags

16. 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 does it all, or two closely integrated products Likely • Probably the greatest potential efficiency gains • But probably the biggest disruption to existing processes

17. ‘End to end’ software …and outputs iXBRL file Bookkeeping Year-endaccounts Filing Single software product does both bookkeeping and AP

18. 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 iXBRL file; (b) get them to supply a Word file and use post-production converter or outsource Likely • Not necessarily your problem • Make sure you are given the correct accounts

19. 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. The ‘soft landing’

20. 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 paul.booth@icaew.com