Tax bodies have expressed disappointment that ministers have endorsed the recommendation of HMRC to proceed with the mandation of accounts in iXBRL. This comes despite significant parts of the business sector and the profession still suffering from implementation problems, some of which are still coming to light, meaning they cannot be ready for mandation.
This news was given in a letter sent to the tax bodies last night by David Gauke, the Exchequer Secretary to the Treasury, in response to a joint letter to him from the six main professional tax and accountancy bodies last week.
Anthony Thomas, Deputy President of the Chartered Institute of Taxation, commented:
“This decision will come as a blow to some businesses and members of the professional bodies who are struggling with implementation due to the insufficiency of time between software arriving and the legislation commencing on 1 April 2011.
“However I welcome the minister’s recognition that there will be a soft landing for the changes, with HMRC ‘sympathetic to any difficulties caused by lack of familiarity with new software or delays in receiving software.’ This is a positive step. HMRC have also agreed to provide a dedicated email address for agents and businesses to contact them where they are unable to produce iXBRL accounts.”
Simon Braidley, President of the Association of Taxation Technicians, commented:
“The ATT, along with the CIOT and other professional bodies, will continue to work with HMRC with a view to any guidance being as clear as possible, so that members facing problems through no fault of their own encounter minimal additional burdens in terms of dealing with HMRC and penalties.
“The professional bodies will be doing all we can to monitor the situation and raising with HMRC any new issues which come to light. To enable us to do this we urge members to report to us any issues they face.”
Notes for editors
- Background to iXBRL issue
iXBRL – inline eXtensible Business Reporting Language is the computer language in which most Corporation Tax returns are due to be submitted from 1 April 2011.
Putting aside our reservations in mandating the use of software which had not been designed, let alone developed, launched and tested, the professional bodies agreed to work with HMRC to encourage the software market to develop and produce software in good time for mandation.
HMRC assured us that software would be available from the major suppliers by Autumn 2010. Given a busy period in the industry over November to January and with less than six months for users to implement software, train staff and test their new processes, mandation by 1 April 2011 was always going to be an extremely tight target.
New software can take months to install, train staff, implement and agree with clients new methods of working – none of which can be done until the new software has been tested. Agents now have less than two months to do this.
The submission of CT computations is proceeding well with over 60% submitted online in December 2010. We continue to support that process. There are however, problems with the statutory accounts side.
Companies and agents planning to use other software solutions for preparing iXBRL-compliant accounts are also facing difficulties:
Practitioners using another leading accounts preparation package already released are finding that ‘automatic iXBRL tagging’ extends to only a proportion (typically up to 80%) of the items on HMRC’s minimum tagging list, leaving the remainder to be tagged manually. Manual tagging is a time-consuming and costly process requiring staff with tax and iXBRL skills estimated at an additional £200 to £500 per small company. Quotes of up to £10,000 are being provided for larger companies.
In some cases, expensive replacement of hardware has been necessary in order to support the new software – and agents are not aware if this need until they have tested the software. We believe that allowing the filing of PDF accounts for an interim period, plus the suggested soft landing on penalties, followed by a period when accounts are accepted which meet the minimum validation tests on the Government Gateway, would provide a better result for all parties.