iXBRL: Ready for Round Two?
HMRC's iXBRL filing deadline may have been something of a damp squib for many firms, but the next few months will be the real test
iFor many accountants, the April 2011 HMRC iXBRL deadline seemed to be a Y2K moment. Much was made of it in advance but for many, April came and went without incident. However, 1 April was just the first round for businesses to start submitting their corporation tax filings to HMRC using the iXBRL format and the next few months will continue to test the profession.
In the run up to April, many firms simply underestimated the time it would take to understand and complete their iXBRL submission. To get around this, some decided to outsource the requirement this year and take time to train staff to be ready for next year’s submissions. Others decided to file early to delay the issue of iXBRL for another year altogether.
These are however short-term solutions. HMRC has been lenient in showing discretion to firms who were not fully-prepared through its ‘soft landing’ provision but this goodwill will only last for so long. Businesses that aren’t up to speed with iXBRL already will not only need to familiarise themselves with the current “minimum tagging list” but will also need to quickly get to grips with future tagging requirements as well.
The first year of iXBRL is based on an initial taxonomy of 1,253 for UK GAAP tags but this is expected to leap to 5,292 in 2013. Given that many firms managed to get through the gateway with a bare minimum of just 16 tags, there is clearly a steep learning curve ahead for many. So what are the lessons learnt from the first wave of submissions and how can practices be better prepared next time:
• Know your options: While iXBRL is a mandatory format there are options when it comes to exactly how you tag. Some practices may prefer to stick to traditional Word and Excel documents and use a tagging tool to complete their submission. For others, a full accounts production tool will be a more efficient process and for those who don’t have the resources to train staff in-house, outsourcing iXBRL may be the best option. Take the time to weigh up the pros and cons of each to find an approach that works for you.
• Work out the workload – Whether you are manually preparing your sets of accounts or using an accounts production tool you still need to factor in extra time to produce accounts in iXBRL. If you have a number of accounts with a particular year end, think about getting some of them done ahead of time so you don’t have a peak in your workload while still getting to grips with the complexities of iXBRL.
• Take responsibility: Your firm may have separate tax and accounts departments but someone will need to take overall ownership for iXBRL and ensure that both staff and clients understand how iXBRL affects them. They will also need to ensure that the automatic tagging of the accounts is correct and any manual tagging required is completed and reviewed.
• Test the technology: Most of the time your iXBRL compliant software will take care of the tagging for you, but you still need to review the tags and use your judgement to make sure they have been correctly applied. You should also make sure your software is compatible with any past or current work so you can easily get the data into the iXBRL format with minimal duplication of work.
• Review and refine: If you have already made your first iXBRL submission then now is a good time to take a step back and review and refine processes. Did it take longer than expected? Do you need to change your practice’s fee structure to incorporate the extra time needed to complete and review the returns? Is there more training and education to be done within the practice and client base ahead of the next submission?
If iXBRL has taught our industry anything, it is that the firms which take time to properly prepare processes and educate themselves on being compliant now will be in a much stronger position to manage their next submission accurately and on time. In doing so, they can avoid the last minute rush that unfortunately characterised the transition to iXBRL for so many this time around.
Phill Robinson is chief executive officer of IRIS Accountancy Solutions