Despite originally announcing that tagging against full rather than abridged taxonomies would be introduced 1 April 2013, HMRC have indicated that they have no plans to move to full tagging.
BDO pushed for the deferral of full tagging until a level of stability had been reached for the online filing process and to allow year 1 glitches to be addressed by HMRC. We also felt that proposed changes to accounting standards and alignment with the timing and approach taken by Companies House meant that a deferral would be in the best interests of our clients.
Well over one million company tax returns have been filed electronically since 1 April 2011, with the supporting accounts in iXBRL. Rejection rates have fallen as software and tagging services have matured but during the December filing peak, still nearly one in seven filings were rejected by HMRC’s Gateway.
Whilst many will have failed due to simple administrative oversights such as errors in the Companies House number format, many failures will be due to the deficient tagging of accounts.
What about soft landing?
The transitional period (nee soft landing), may provide comfort to some who feel they have demonstrated best endeavours to comply with the mandate as may the absence of any new penalty regime to punish deficient tagging. However, HMRC admit that whilst they will not open CT enquiries solely or mainly to check the quality of XBRL tagging, deficient tagging will increase the potential for post-submission contact from HMRC.
The quid pro quo of deferral will be that HMRC will expect to see an improvement in the quality of iXBRL tagging. In addition we can expect mandatory new areas to the existing taxonomies to improve the consistency and reconciliation of P&L account items common to the tax computation and financial statements.
In reality, if you shine a light on soft-landing, you may find that it casts no shadow.
Whilst the deferral will give software providers more time to develop their tagging and accounts preparation systems, better software is no substitute for knowing the underlying taxonomies inside out or understanding the many ambiguities between accounts and those taxonomies.
Many companies will therefore continue to choose to outsource the tagging of their accounts to accounting and taxonomy experts who can demonstrate this understanding underpinned by robust tagging and review systems, at least until the future of iXBRL becomes clear.
BDO – Experts in iXBRL
BDO have a 100% success rate in tagging thousands of sets of HMRC compliant accounts across all sectors, taxonomies and entity types.
Where year one tagging hasn't produced a sustainable answer for companies, they can transition to our services seamlessly – click here to view our services.
Whilst exploring in house tagging or integrated iXBRL accounts production approaches are likely to become more popular, we are working with many clients to ensure that the significant internal resource and systems implementation costs prove a worthwhile long-term investment in what is still a developing market.
21 March 2012