April Fools’ Day may yet turn out to be an inauspicious date for the government to launch the snappily named Online Extensible Business Reporting Language, otherwise known as iXBRL.
The general feeling among many tax and accounting professionals is that the government is foolish in pressing ahead with its 1 April implementation date in the face of howls of protest and calls for a delay to the internet tax-filing technology from six of the UK’s largest accountancy bodies.
These calls have come rather late in the day. Businesses have known for five years that iXBRL was on the horizon, while Companies House has also stated that electronic account-filing will be mandatory by 2013, announcing in 2009 that it would join HM Revenue & Customs (HMRC) in accepting certain filings in iXBRL format.
The changes require all company tax returns and corporation tax payments made from April to be filed using iXBRL, which provides a method for tagging elements of financial and business reporting data that renders them in forms readable to both humans and computers.
And there is, in fact, general enthusiasm among finance professionals for online tax filing, the benefits of which will include reduced errors for the re-keying of financial data, faster analysis and reduced costs associated with data processing.
Ready or not
The issue is not with the principle of electronic filing, then – the issue is with the deadline. Concerns were sparked after it was revealed in January that some IT software companies were decidedly unready for iXBRL or – at best – had only recently released the new technology. Sage, one of the largest companies, will not release its fully functioning version before the deadline.
This news prompted a group of accounting bodies – the Association of Chartered Certified Accountants (ACCA), the Association of Accounting Technicians (AAT), the Chartered Institute of Taxation, the tax faculty at the Institute of Chartered Accountants in England and Wales and the Institute of Chartered Accountants of Scotland (Icas) – to write to David Gauke, exchequer secretary to the Treasury, urging a six-month delay.
“We are in a situation in which a large number of companies and tax agents have not got the software in place. People are going to have a very uncomfortable period,” Donald Drysdale, assistant director of tax at Icas, tells Financial Director.
Despite the army of accounting bodies lining up to denounce the deadline, their pleas fell on deaf ears. The government will doggedly press ahead.
In response, Gauke said there would be a soft-landing period during the transition to iXBRL, and HMRC would be “sympathetic” to any difficulties caused by a lack of familiarity with the new software – and that no one who has made “reasonable effort” to comply will be penalised.
By going ahead with the 1 April deadline, the government will defeat one of the main principles of Lord Carter’s report, which proposed several guidelines for the introduction of iXBRL back in 2006, says Chas Roy Chowdury, head of taxation at ACCA.
“The Carter proposal was to have a 12-month stable environment. That is not the case. The government should not try to fit a screw into a square hole,” says Chowdury.
At Icas, Donald Drysdale is also less than impressed with Gauke’s assurances, claiming that businesses are going to be left to pick up the costs.
“Most of them must rely on commercial software vendors, some of whom have failed to deliver their accounts preparation solutions in time,” he says. And he adds that other packages fail to offer the degree of automated iXBRL tagging that had been anticipated, leaving skilled staff with the cumbersome task of completing the tagging manually.
“[Gauke] has expressed the wish that transitional issues should be managed effectively, emphasising that anyone with real difficulties should contact HMRC,” adds Drysdale. “This is far from ideal given that contacting HMRC can be an impossible task at the best of times.”
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