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.