iXBRL accounts and other electronic filing

new electronic format for accounts
HMRC has made it compulsory for organisations to file company accounts, tax returns and computations in an electronic format called iXBRL – inline eXtensible Business Reporting Language. This affects most organisations that currently file corporation tax returns and is a significant issue for organisations who currently prepare their accounts in Word or Excel.

iXBRL is a language written specifically for business reporting. It facilitates the electronic exchange of business and financial data, which should allow HMRC to automatically collate and analyse the numbers submitted. The inline version is a format which is designed to be read by people as well as by machines. Essentially the figures included in the iXBRL file are “tagged” so that they can be identified electronically.

The iXBRL rules will apply to most organisations which submit a corporate tax return, regardless of size, meaning organisations need to review their systems to ensure they can produce the required iXBRL files. Most tax returns and computations are already prepared by accounting firms using compliant software, however the big issue is with the large number of accounts currently prepared by organisations themselves. HMRC has introduced this requirement to reduce processing costs and the easier collection of data. In theory these efficiencies will benefit taxpayers and organisations will benefit from improved online filing. However there will certainly be short-term pain for the majority of organisations that need to change the way they prepare their accounts.

Accounts produced in Word or Excel are not iXBRL compliant and organisations will need to determine how they prepare accounts. HMRC has said that if organisations are unable to submit both corporation tax returns and company accounts in the prescribed format, it will reject the submission, and offenders will be treated as having not filed their returns at all. This could mean penalties and pressure from the authorities to comply.

what to do
If you are currently preparing your accounts on Word or Excel, what are your options?

there are three approaches:

• you convert your Word statutory accounts into iXBRL and tag the data
• we prepare your accounts using our iXBRL compliant software
• you buy an iXBRL compliant accounts preparation programme

first approach
The first approach may be cheaper, but only if you prepare a large number of accounts every year, and the converting and tagging will be time consuming and introduces a significant risk of error.

second approach
The second approach would ensure that the accounts are prepared in the necessary format, would reduce the risk of errors and may actually be more cost effective. We currently prepare over 1,000 sets of accounts on “CaseWare”. This service includes a number of benefits including:

• iXBRL compliant accounts and automatic tagging
• a user-friendly system which means making changes to accounts is easier and quicker
• a format that helps ensure compliance with company law and accounting standards
• the reduction of typographical errors
• the production of consolidated or abbreviated accounts at the click of a button

third approach
The third approach is likely to be the most expensive and is only really appropriate for companies preparing a large number of accounts. The licence and training costs mean that this is not a cost effective solution for most organisations.

what about the accounts filed at Companies House?
The intention is that company accounts will only need to be filed once to satisfy HMRC and Companies House. However, at present, Companies House has decided not to mandate iXBRL filing, and does not intend to do so in the near future.

what about other documents filed at Companies House?
Each year Companies House receives approximately eight million separate documents for filing from the two million registered organisations. It is therefore no surprise that they are now actively encouraging companies to file documents electronically.

Companies House now accept electronic filing of a number of documents through their WebFiling service. The documents that can now be filed electronically include:

• annual return
• change of registered office address
• change in accounting reference date
• director and secretary changes
• dormant accounts
• return of allotments of shares

To use the WebFiling service the company must first register online and Companies House will send through the necessary security codes.

Our Company Secretarial systems are compatible with Companies House and therefore we are able to utilise the Companies House “Software Filing” service when we file documents on clients’ behalf. This “Software Filing” service is open to everyone, but will be of most benefit to those who file on a daily or weekly basis.

what else can I file electronically at HMRC?
HMRC offer a wide range of online services which allow you to:

• access real time accounts and amend information such as contact details
• submit tax, excise and other returns and pay electronically

The following can be filed electronically:

• corporation tax returns and computations
• EC sales lists
• PAYE returns
• personal tax returns
• stamp duty land tax returns
• VAT returns

It should be noted that almost all employers are now required to file their Employer Annual Return (P35 and P14s) online at the end of the tax year, and it is gradually becoming compulsory for employers to file certain in-year PAYE forms online, including the employee starter and leaver information contained on forms P45 and P46.

HMRC are planning to introduce Real Time Information (RTI) which will collect information about tax and other deductions automatically each time employers run their payroll. This information will be submitted automatically to HMRC at the same time the employees are paid. Where employers pay their employees via BACS, the RTI data will form part of the BACS submission. A pilot scheme will run from April 2012 and the introduction of the scheme will be phased in and it is expected that all employers will move to RTI by October 2013. Large employers will be expected to use the system from April 2013.

HMRC are also phasing out paper VAT returns. Most companies now have to file returns online and pay any VAT electronically and the rest will have to file online by April 2012.

Our systems are fully compatible with the new requirements and we can make all the necessary electronic filings on your behalf.