What does the end of HMRC’s ‘soft landing’ really mean for filers?

When iXBRL tagging was first required for Corporation Tax filing and the ‘soft landing’ introduced to allow companies and accountancy firms to understand the new process, HMRC indicated that during the first two years they would exercise some leniency by not investigating companies solely on the basis of poor quality tagging.

However, it can be inferred from this statement that when the ‘soft landing’ does finally expire at the end of March 2013 there will be a tightening of the reporting regime with greater scrutiny and analysis of the tagging.

The need for accuracy and transparency

So, although tagging according to the Minimum Tagging List continues, contrary to what some had predicted, the main result of the expiry of the ‘soft landing’ transitional period will be the need to refocus on the accuracy of the tagging to avoid unnecessary HMRC investigations.

HMRC will expect companies to be transparent in their tax assessment; low quality or limited tagging could be taken as showing a lack of transparency.  After March 2013 it can be assumed that HMRC’s risk assessment procedures will be actively looking for anomalies that point towards potential issues.

What are the risks involved in incorrect tagging?

We expect HMRC to use exception-based reporting to identify companies that have ratios well outside the norms for their peer group.  If a company is applying incorrect tags to its financials, it is likely to come under the HMRC spotlight in the future.

Minimise the risks with Seahorse®

Using Seahorse companies can mitigate these risks and choose to tag according to the MTL or the full taxonomy.  Seahorse makes it easy and the learning engine simplifies the task of choosing the right tag.  Speed of tagging and accuracy are the watchwords.  We’ve recently seen figures from HMRC reporting that Seahorse reached a 99.9% pass rate at the Gateway, illustrating the accuracy of Seahorse tagging.

With Seahorse you and your clients are in very safe hands.

Countdown to the end of HMRC’s ‘soft landing’

Here is the first of a series of articles discussing the ramifications of the end of HMRC’s transitional ‘soft landing’ period.

Since April 2011 it has been mandatory to convert all UK Corporation Tax accounts data into the iXBRL (inline eXtensible Business Reporting Language) format prior to filing with HMRC.

Why was iXBRL introduced?

In common with many other taxation, banking and government regulatory bodies throughout the world, HMRC needed to take steps to tighten their monitoring of the financial affairs of the UK corporate world.  Given this imperative, HMRC recognised the value of introducing XBRL technology to streamline that process, to simplify financial investigation and analysis, and allow anomalies in financial reports to be highlighted more easily.

Why did HMRC introduce the ‘soft landing’?

As the move to iXBRL represented a radical change in the filing process, HMRC sought to make its new reporting regime more acceptable by introducing a two year transitional period, known as the ‘soft landing’.  This was designed to give companies, and the software vendors that service them, maximum opportunity to prepare for the changes.  However, this interim period expires at the end of March 2013.

Exactly what is the ‘soft landing’?

There are misunderstandings about what the ‘soft landing’ means for filers.   It was introduced as an interim step to allow companies to become familiar with the iXBRL tagging process.  HMRC’s main provision was that in the two years following the introduction of the iXBRL mandate they would not investigate organisations solely on the basis of poor quality tagging.

‘Soft landing’ versus the Minimum Tagging List

There has been much confusion about the ‘soft landing’ and its relationship to the Minimum Tagging List (MTL).

First of all, let’s look at the MTL.  Be aware that there are three levels at which iXBRL tagging can be applied:

  1. Tagging a minimum number of concepts:  there are 13 obligatory concepts that, if tagged correctly, will allow the filed accounts to pass the HMRC gateway.
  2. Tagging according to the Minimum Tagging List:  this contains around 1,300 tags available for use, though most companies will on average use around 100 different tags.
  3. Full tagging:  this offers the user up to 5,000 tags from which to choose.

Although HMRC recently announced that it will not be removing the MTL in favour of full tagging in 2013, as was originally expected to happen, the ‘soft landing’ itself will terminate at the end of March 2013.

How does this affect Seahorse®?

Seahorse, CoreFiling’s iXBRL accounts conversion system, covers all the options – and opportunities – that will arise, when the ‘soft landing’ ends.   From the starting point in April 2011, the product was fully ready for use, and over the past two years it has progressively been enhanced to give greater usability, time-savings and improvements to the accuracy of the tags being applied.  Unlike some competitive products, Seahorse has from the outset offered the opportunity to tag according to the MTL or to use the full UK GAAP and IFRS taxonomies, so users need have absolutely no cause for concern about the future.

Avoid an uncertain future by using Seahorse to tag your accounts.

New Public Working Draft of Table Linkbase Specification

XBRL International has announced the publication of a new Public Working Draft of the Table Linkbase specification.  This specification forms a key component of the Solvency II and CRD IV XBRL reporting projects.  This release is the first Public Working Draft since 2011, and represents a significant step forward in the maturity and quality of the specification.

Projects that have looked to adopt the Table Linkbase specification have been held back by a lack of recent public releases of the specification, creating interoperability problems as projects have adopted customised versions of the published schemas and standards.

The latest release of the specification has been driven forward by the efforts of CoreFiling staff, and in particular, Jon Siddle.  CoreFiling contributions have included the introduction of an XML serialised “infoset” for defining and testing the conformance of Table Linkbase processors, and the refactoring of the specification into three separate models (Definition, Structural and Rendering) to give a clear separation between syntax and semantics.

These improvements to the foundation of the specification will accelerate the development of the standard towards becoming an XBRL International Recommendation, and will help address the interoperability issues that have beset early adopters of the specification.