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:
- 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.
- 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.
- 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.