XBRL filing requirement could cost firms 'tens of thousands'

Tax experts have condemned the insistence from the taxman that corporate tax
returns only be made in the future using the controversial computer language
XBRL.

For accounting periods ending after 31 March 2010, corporate tax returns have
to be submitted using XBRL, a language that tags financial data and allows
comparability. The majority of corporate tax accounts are currently filed using
Microsoft Word or Excel.

But tax advisers have described the decision to adopt XBRL as both ‘strange’
and placing an ‘unwanted overhead’ on small business.

Tony Spillett, tax partner at BDO Stoy Hayward, estimated the cost of
implementing XBRL could be ‘tens of thousands of pounds’ per firm.

‘There’s potentially a lot of work to be done. There’s a lot of red tape and
additional burden on business so that HMRC can make life easier for themselves.
It’s a real unwanted overhead,’ he said.

He added the long-term shift away from paper filing was welcome, however
‘it’s the devil in the detail and the way the HMRC has used the opportunity to
capture the data in XBRL form [that] is concerning’.

According to Kevin Salter, technology partner at Glover Stanbury & Co,
the decision by HMRC to adopt XBRL as the required format is strange given so
few firms currently use the system.

‘We have no choice. I don’t know what their rationale for going down that
route is. Various representations have been made by accountancy bodies but
they’ve chosen to go their own way,’ he said.

Salter said a contracted software house will implement the necessary change
on behalf of the firm but expects support fees for the service to rise as a
result of the new requirement.

Tax advisers believe the change to XBRL will mean HMRC has the capacity to
mine data more effectively and could lead to an increase in the number of tax
enquiries.

A spokeswoman for HMRC confirmed that if a return is not filed in the new
format, it will be ‘disregarded’ and treated as not having been delivered.

She said HMRC has consulted with the profession over the change and is
continuing to engage with the software industry.