SAGE RECENTLY FOUND itself embarrassed after admitting its new tax filing technology would not be ready for customers. Although the software company will have a temporary solution, what are the ramifications for tax advisers?
From 1 April all corporation tax must be filed using new data-tagging technology known as iXBRL. But, while Sage said it will have a basic iXBRL interim product ready before the deadline, it will not release the full version on time.
Users of Sage’s accounts production software will be able to file UK GAAP and IFRS tax returns. They will be provided with a temporary product from Thomson Reuters, which will have just the minimum requirements to file a return using iXBRL.
The interim software, ONESOURCE, will be electronically available to users by the end of January.
Advisers will be able to compile tax returns in Sage and transfer the information into ONESOURCE. Although the company assures its users most of the transfer process is automated, some IT experts remain unconvinced.
Paul Booth, technical and development manager at ICAEW’s IT Faculty, believes although Sage may have minimised as much upheaval as possible, users will still have some extra effort to make in transferring data.
“It is good that Sage have come up with a workable interim solution. But that interim solution could nevertheless involve the users in extra time, because it is adding on an extra process in what they already have to do to prepare a set of accounts,” said Booth.
A spokesman for Sage said: “iXBRL is going to involve a learning curve for every accountant and, because of this, more time will inevitably have to be spent on producing compliant accounts.
“We have a team of qualified accountants working on sample files to automate our solution to the greatest possible extent and have also invested in customer services so that we can support accountants before, and during the introduction of iXBRL.”
While Sage is right in suggesting all tax advisers will need extra time to understand how to file iXBRL returns, it has not made life particularly easy for its own clients.
Advisers will need to learn how to transfer work into ONESOURCE, just three months before the deadline, and how to use Sage’s own updated product later this year.
Chas Roy-Chowdhury, ACCA’s head of tax, said: “For users they will have to learn a process now and then another process when they get their new release from Sage.”
Sage’s MD for the accountants’ division Jayne Archbold said the business delayed the release of its own iXBRL product until after the busiest period for advisers, and to allow for more vigorous beta-testing.
Archbold said Sage could have released the product but it had listened to its customers and this strategy was what they wanted. The new software will include several changes to the product, based on suggestions from customers, as well as the full iXBRL tagging list (see box).
The business wanted to ensure the product was properly tested, which Archbold believes other IT companies have failed to do, in order to make the deadline.
Sage does have some support for its plans. Bo Lykkegaard an analyst at IDC, said it is understandable why Sage issued a temporary solution if the full version was not sufficiently tested yet.
“An immature release could cause major problems to customers, such as an inability to file timely tax returns,” said Lykkegaard.
But competitors have argued it had the same amount of time as other software houses.
ACCA’s Roy-Chowdhury believes HMRC should push back the mandatory iXBRL filing deadline to September for all corporation tax submissions, a view echoed by ICAS.
The taxman could provide a “workaround solution” which would enable users to file without having to tag information. Charities are exempt from filing accounts in iXBRL format by the deadline, and have been given a workaround solution. They have been given an exemption because iXBRL technology is not yet available for the sector.
The taxman said it has no plans to delay introduction and reiterated it would adopt a soft landing for the first two years. If filers can show they have taken reasonable steps to avoid mistakes and taken due care, they will not be fined.
Although the soft approach offers comfort to advisers, the situation could impact on Sage’s brand.
“While I will not be sur-prised if Sage ends up losing users in the longer term because of this, now might not be the time for everyone to jump ship. Because changing software is a significant process that can’t be done at a drop of a hat,” said ICAEW’s Booth.
Sage will need to go above and beyond in supporting its customers both before and after the deadline if it hopes to minimise the negative effects of its decision.
At the time of going to press Sage confirmed it was due to release the ONESOURCE template at the end of January and its updated product later this year. However, a spokesman would not give a specific timeframe.
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