We all know that we can (and in some cases, must) file end of year returns - payroll, personal tax returns, corporation tax returns - online. HMRC even provided monetary incentives as recent as a few years ago for online filing of end of year employer return. Most recently, VAT returns are to be filed online.
All businesses must be prepared for more online activity, as from 1 April 2011 corporation tax documents i.e. the corporation tax return (CT600), the corporation tax computations and a copy of the accounts from which the tax computations are based must be filed electronically, regardless of the company's year end.
Ok, so what's new? Isn't it true that most accountants already do this for their clients? Yes, that might be so, but the key difference is that from 1 April 2011, the documents must be filed electronically using a format called "inline eXtensible Business Reporting Language" ("iXBRL").
What is iXBRL?
iXBRL is a method of translating financial information into an electronic format, by the assignment of an internationally recognised tag to each item within the relevant financial information.
From these tags an html document i.e. a webpage, is produced that appears exactly like a hard copy of the document. The web page can be processed so that databases can be populated with the information contained within it. This will enable efficiency savings on data processors and enable easier analysis of the data.
Government agencies are driving this process forward. HMRC has 1 April 2011 as the deadline. Companies House has a project to adopt online filing of accounts although no timetable has been set yet. So far so good, right?
The issue with iXBRL
However, there are issues with iXBRL. The biggest of which is that most accounts and corporation tax software are not currently able to prepare these documents! Compliant software is not yet available and is unlikely to be until September 2010.
Any company with a 30 April 2010 year end and beyond will now have an odd decision to make due to the changes - file your documents early or delay the preparation of the documents until compliant software is available. Neither of which are ideal solutions.
If you prepare your company's accounts in-house, then be prepared to invest in some sort of conversion tool to make your accounts iXBRL compliant. But beware, it is more than likely that this will require the user to individually assign tags to the correct field throughout the accounts. The scale of this task? There are over 5,000 different tags defined for use in the preparation of accounts.
....and now for some marketing
At Barnes Roffe, we expect to be able to file the information in the required format well ahead of the 1 April 2011 deadline. We will be in touch with clients to discuss how the new filing regime affects them. Our clients will therefore have the freedom to make an informed choice, and the comfort to rest assured that compliance is in hand.
We will be pleased to advise you on this matter or any indeed any other issues. Why not take advantage of our Free Business Appraisal [1]offer to find out if we can save you and your company money? Alternatively, if you are still not sure how this new filing regime will affect your business, why not send us a query through our free and confidential Ask an Accountant scheme.
Final word
Call me cynical, but as much as I welcome any move into the digital age and a paperless environment, I really do think that the introduction of this requirement after one of the worst recessions ever is simply creating more burden for small to medium sized companies, the backbone of the economy. Somehow I sense that the change may result in more enquiries being raised by HMRC Inspectors whose primary task would be to interrogate the wealth of data and find additional tax revenues from taxpayers!
Of course this is just my personal opinion and when it comes to the crunch (I shouldn’t be using this word!), my opinion really doesn’t matter, but all businesses must comply with the new legislation.
For more information please visit www.barnesroffe.com [2]