Why should you file in iXBRL format?Why is iXBRL the format in which HMRC needs accounts and tax computations? Learn more about advantages of iXBRL for the regulator, filers and consumers.
Why should you file annual accounts and tax computations in iXBRL?
Legislation, which came into force on 1 January 2010, means that it is compulsory for companies to send their Company Tax Returns online using iXBRL for accounts and computations. It is no longer acceptable for most companies to send either the accounts or computations on paper or as a Portable Document Format (PDF) attachment to an online return. Unincorporated charities, clubs and societies may use either iXBRL or PDF for their accounts, but any computations must be in iXBRL format. The new requirements are effective for returns delivered on or after 1 April 2011, for any accounting periods ending after 31 March 2010.
It is estimated that Some 1.9 million UK companies file accounts and tax returns in XBRL each year.
Noncompliance could be extremely costly. Companies that fail to prepare their annual financial statements within the stipulated deadline can face penalty under section 917 EA (7).
Advantages for the regulator
The iXBRL reporting system will allow the HMRC to determine industry trends and gain a high-level understanding of business in UK. By identifying various trends, HMRC will be able to pinpoint issues relating to the financial soundness of individual operations. HMRC will also be able to compare companies with companies and industries with industries over different periods.
“iXBRL enhances understanding of the taxpayer base; allows better targeting of interventions; saves clerical resource and improves accuracy; makes accounts and computations accessible to computerized analysis tools,” HMRC said recently. “XBRL tagged data is a powerful resource. Exploitation of the data will become increasingly central to HMRC’s compliance assurance, risk assessment and analysis functions.”
Advantages for the user and consumer
The information gleaned via XBRL will be useful to private investment companies, giving them greater insight in where to invest. It could also help flag accounting irregularities and corporate fraud, potentially saving the country millions of pounds and safeguarding jobs.