What the iXBRL..?!!

(Everything you didn’t realise you wanted to know about HMRC’s CT Online service…)

Chartered Accountants Ireland22nd November 2010

Jeff Smith - HMRC

Today’s Themes

• Background to mandatory CT online filing

• What are XBRL and iXBRL?

• Rationale

• Software Solutions

• What should businesses be doing now

• Question & Answers

Lord Carter’s 29 key recommendations

The universal electronic delivery of business tax returns by 2012.

• SA – April 2008

• PAYE – April 2009

• VAT – April 2010

• CT – April 2011

CT Online – Headline Statistics – 30 Sept 2010

• 26,431 agents are registered to represent 1,489,817 CT Organisations Online

• Paper Returns down 100K to 445k

• Online Returns up 105k to 270k

• Online percentage has increased from 14.5% to 37.8%

Online Company Tax Returns Received in 2009/10

• HMRC Software 14.8%

• Commercial Software 85.2%

Key date for Corporation Tax (CT)

1 April 2011

• all company tax returns for accounting periods ending on or after 1 April 2010, that are filed on or after 1 April 2011, must be filed online

• accounts and computations must be filed in a specified data format known as Inline XBRL (iXBRL)

• all Corporation Tax liabilities must be paid electronically

• Internet banking

• Telephone banking

• Direct Debit

• Bank Giro

• Debit and credit card at www.billpayment.co.uk/hmrc

• Bankers’ Automated Clearing Services (BACS) Direct Credit

• Clearing House Automated Payments System (CHAPS)

How to pay electronically

Use your bank/building society services and pay by:

The Legal Background

• HMRC can require, by Notice, a company to deliver a Company Tax Return by virtue of Part 11, Schedule 18, Finance Act 1998

• The Regulations applicable to the electronic filing of company tax returns were made and laid before Parliament on 7 December 2009. Because they amend an existing Statutory Instrument, they’re not an easy read!

• Much more digestible are the HMRC Commissioners’ Directions, which can be found on HMRC's website.

Compulsory CT Online Filing

Will NOT change

• Who has to file a Company Tax return• When the return has to be filed or the tax paid • What is legally required to be filed as part of a company tax

return

Will change ONLY how the return has to be filed -

• Via the Internet with the ‘statutory accounts’ and Corporation Tax computations in iXBRL format

So, for Corporation Tax that means …

Company Tax Returns – comprising:

• CT600 + supplementary pages (XML)

• Accounts* (iXBRL)• Tax Computations (iXBRL)

That are delivered on or after 1 April 2011 for accounting periods ending on or after 1 April 2010

Must be delivered online

* These are the ‘statutory’ accounts that Companies Act 2006 (and other legislation) requires all individual companies to prepare

CT600 Form

Statutory Accounts

Computation

CT600 Form

Statutory Accounts

Computation

What are XBRL and iXBRL?

eXtensible Business Reporting Language

XBRL -

• is a computer-readable data standard for financial reporting statements

• is around 10 years old - but based on XML which has been around for even longer

• like “bar-coding” for financial information

• uses defined ‘tags’ to describe financial information

One Document – Two Purposes

Human Readable Computer Readable

Inline XBRL [iXBRL]

• HMRC’s strategic solution for accounts and CT computations

• Single document combines “human-readable” information and “computer-readable” data

• Preserves all presentation: branding, formatting, terminology. HMRC sees exactly what companies and agents send

• Allows smarter data handling by HMRC and so better, risk focused, interactions with customers

How do I know what to tag?

• An important consideration if you are taking the ‘conversion’ approach and doing it yourself but users of ‘final accounts’ software may also have to do some tagging

• iXBRL “tags” come the from relevant taxonomies. • UK GAAP or UK IFRS with extensions if relevant – for accounts

• UK Common Data (integrated into 2009 versions of UK GAAP and UK-IFRS)

• CT Computational - for tax computations

• Minimum tagging lists at the start

 Taxonomy  Full List Minimum Tagging Lists

UK GAAP 2009 5,292 + Charities 1,253

UK-IFRS 2009 3,820 + Banks etc 1,629 + Banks etc

UK Common Data 1,028 All relevant tags must be used

CT Computational 4,164 1,207

Tagging Requirements

• Full tagging for Accounts (UK GAAP and UK-IFRS) will be required from April 2013

• Reduced tagging for CT Computations will continue indefinitely – only changes will be to reflect new legislation

Software will help you through the process

MUST Tag items if used in your accounts or computations and appearing on the minimum tagging lists

CAN Choose to tag items used in your accounts or computations and appearing in the full tagging list

DO NOT Tag items in the minimum tagging lists if they’re not

used in your accounts or computations

Company‘s Accounts UK GAAP Taxonomy Minimum Tagging List

Turnover

Cost of sales

Gross Trading Profit

Stationery & Printing

Interest Receivable

Lawsuit Provision

Turnover

Cost of sales

Gross Trading Profit

Stationery & Printing

Interest Receivable

Bad Debt Provision

Turnover

Cost of sales

Gross Trading Profit

Bad Debt Provision

1

2

3

1

2

3

1

2

3

198

199

200 5,290

5,291

5,292

1,251

1,252

1,253

………

…

…

…

…

…

……

…

Tagging Requirements

Company‘s Accounts UK GAAP Taxonomy Minimum Tagging List

Turnover

Cost of sales

Gross Trading Profit

Stationery & Printing

Interest Receivable

Lawsuit Provision

Turnover

Cost of sales

Gross Trading Profit

Stationery & Printing

Interest Receivable

Bad Debt Provision

Turnover

Cost of sales

Gross Trading Profit

Bad Debt Provision

1

2

3

1

2

3

1

2

3

198

199

200 5,290

5,291

5,292

1,251

1,252

1,253

………

…

…

…

…

…

……

…

Tagging Requirements

Company‘s Accounts UK GAAP Taxonomy Minimum Tagging List

Turnover

Cost of sales

Gross Trading Profit

Stationery & Printing

Interest Receivable

Lawsuit Provision

Turnover

Cost of sales

Gross Trading Profit

Stationery & Printing

Interest Receivable

Bad Debt Provision

Turnover

Cost of sales

Gross Trading Profit

Bad Debt Provision

1

2

3

1

2

3

1

2

3

198

199

200 5,290

5,291

5,292

1,251

1,252

1,253

………

…

…

…

…

…

……

…

Tagging Requirements

Company‘s Accounts UK GAAP Taxonomy Minimum Tagging List

Turnover

Cost of sales

Gross Trading Profit

Stationery & Printing

Interest Receivable

Lawsuit Provision

Turnover

Cost of sales

Gross Trading Profit

Stationery & Printing

Interest Receivable

Bad Debt Provision

Turnover

Cost of sales

Gross Trading Profit

Bad Debt Provision

1

2

3

1

2

3

1

2

3

198

199

200 5,290

5,291

5,292

1,251

1,252

1,253

………

…

…

…

…

…

……

…

Tagging Requirements

Companies House & HMRC in unison

• Recognise that HMRC and Companies House deal with similar customer groups.

• Format alignment by both organisations will avoid producing similar information in different formats.

• HMRC’s iXBRL channel launched on 23 November 2009.• Companies House launched its iXBRL service (initially for

unaudited accounts for small companies – full or abbreviated) in August 2010 – full set by Summer 2011.

• iXBRL will be mandatory for HMRC but voluntary for Companies House.

• HMRC and Companies House now offer a template-based ‘Joint Filing’ software tool, suitable for smaller companies

Why?

The Rationale Behind iXBRL

• Early identification and quick resolution of simple errors

• Apply risk parameters to • deselect low risk cases• flag items outside ‘norms’

• Better targeted questions during interventions

• Continually develop HMRC’s picture of risks and norms

• Better informed (tax) policy making

Better data and smarter use

Company Tax Return – submitted online with accounts and CT comps in iXBRL

Human readable format

Holding Database

Risk Mart

Analysis capability

computer readable format

Define /develop risk parameters

Risks identified

Policy making

Intervention

Resolution

Inspector

Other databases

CT CompsAccounts CT600

Solutions!

Software

• HMRC’s CT filing product is in place and operational• For others, it will be key that they -

• identify the right approach to going online: Final Accounts Production [FAP software] or conversion tools or a ‘managed service’

• get the right software product or service to support their chosen approach

• Bulk of the tax computations products are available now

• Bulk of the accounts production products will be released in Autumn 2010 – 4 already HMRC-recognised

HMRC Recognition of Software

• HMRC does not ‘recommend’ or ‘approve’ but does have ‘test’ and ‘recognition’ processes

• Software developers can test that their products will work with HMRC’s systems

• ‘Recognition’ process currently

• Based on 3 sets of ‘standard’ accounts and CT comps provided by HMRC

• Developers use their product to produce and submit iXBRL versions

• HMRC review to ensure completeness

Currently Recognised Commercial Software

• 20 developers’ iXBRL products/services have been recognised

• 10 different ‘integrated’ software packages

• 5 managed tagging services (i.e. outsourcing)

• 9 conversion tools

• 17 developers are able to submit iXBRL documents generated by other software (including some those above)

• www.hmrc.gov.uk/efiling/ctsoft_dev.htm will give latest position with

recognition

HMRC’s CT Filing Product• Available since 23 November 2009• Extended in October 2010 to incorporate fields that Companies

House need and will be the basis for ‘Joint Filing’• Based on CT600(Short) + Supp Pages A, E and J• Intended for smaller companies with less complex affairs

• Has to be downloaded for each company for each AP

• Previous year’s figures do not carry forward

• Templates for Accounts and CT comps ‘impose’ a format

• Feedback from agents and their rep bodies suggests it’s unlikely to be used by them except for, e.g., pro bono work for clubs, small charities, etc.

So what should I be doing now?• Thinking about the right option for your business

• Look at software options available or coming to market

If going the ‘conversion’ route for accounts – suggest

• Set up a joint project between Finance and Tax departments

• Review current processes including use of Word/Excel templates

• Think tagging options – in-house or outsourced

• Create and use templates for in-house use

• Tagging is a task for an accountant NOT an IT person

• Experience so far is that tagging is easier/quicker than companies had expected

Last but by no means least…

Soft Landing

The key is working together - to make this work for all of us

• Help and support in the implementation phase

• Appreciate not everyone will get it exactly right first time

• Particularly sympathetic approach to penalties in first two years but flexibility beyond that

• Reasonable Excuse

• Reasonable Care

• Working with you to get it right

Any questions?

Thank you