iXBRL - What You Need to Know
In today’s special bulletin we focus on iXBRL:
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What it is
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What it means for tax filings
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Current proposals for its implementation in Ireland
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Institute representations on members’ behalf
iXBRL – What it is
iXBRL is an abbreviation of “inline eXtensible Business Reporting Language”. It is a way of “tagging” financial data so it can be automatically processed by software systems. Like barcode technology, a computer can read the tagged data and extract data for analysis.
What it means for tax filings
iXBRL allows tax authorities to make better use of the data they receive from tax return filings. This is because data can be extracted directly from financial accounts and tax computations for analysis, e.g. to run a cross check on profit margins within a sector, or to identify anomalies in any data provided.
From a business perspective, tax computations and accounts may be prepared using existing software packages but an extra step is then required before filing. Certain data in the accounts and computations must be tagged before that data is returned online. This can be done either manually or with the use of specialist add-on software bought in.
Some members, with UK clients, may already have experience of iXBRL. iXBRL filing has been mandatory for UK corporate tax filing of accounts and computations since April 2011.
To reduce the administrative burden on business of iXBRL the UK has facilitated joint filing of accounts to HMRC and the Companies Office, so accounts need only be filed once.
Current proposals for implementation of iXBRL in Ireland
Revenue believe that the use of iXBRL technology can assist them in better targeting of their compliance interventions, thereby minimising engagement with compliant taxpayers. In January, they launched a consultation process on a proposed timeline for implementation of an iXBRL filing model in Ireland. It proposes:
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An option to file accounts through iXBRL on a voluntary basis from late 2012.
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A mandatory requirement for LCD cases to file accounts through iXBRL for returns made from September 2013.
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A phased roll-out of iXBRL for accounts filing for other taxpayers, commencing October 2014. This would follow the sequence for introduction of mandatory efiling.
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A mandatory approach to filing of tax computations, to follow after the above.
Institute representations on members’ behalf
Last month, the Institute submitted detailed representations to Revenue on members’ behalf. The points we raised were as follows:
1. A Cost/benefit analysis needs to be carried out.
In the current business environment it is essential that the benefits and costs to business of any new compliance regime are considered in deciding whether roll-out of a new filing requirement is appropriate.
2. A mandatory approach to iXBRL should not be adopted until a single filing of accounts is possible.
iXBRL can reduce the burden of administration for business by facilitating a single filing of accounts that will satisfy both Revenue and the Companies Registration Office. As noted above, the UK has adopted this approach. There has been no timeline proposed for introduction of this facility in Ireland.
3. The initial focus should be on filing computations through iXBRL, rather than accounts.
Feedback from members with UK experience of iXBRL has indicated that it is costly to convert financial accounts into iXBRL format every year. Tax computations are less costly to convert but would still provide useful data for Revenue. As such, it is preferable to focus initially on filing computations, rather than accounts, through iXBRL.
4. A clear and adequate lead-in time for business is essential
Businesses need an adequate lead-in time to enable them prepare for iXBRL filing. They need time to consider how they will tag the required data and who will do the tagging. So that businesses can plan their timeframe for finalising and tagging accounts, it would be useful for them to be aware at the beginning of the accounting period that iXBRL filing is required. As such, we would suggest that the commencement date for LCD filing should be no earlier than for accounting periods commencing on or after 1 January 2013.
5. A dedicated information campaign and support resources are needed.
It is very important that Revenue implement a clear education campaign on iXBRL for the business community well in advance of the commencement date. This will allow those impacted by the new requirements to prepare and test software in advance of the filing date.
We have also suggested that Revenue develop a dedicated computation tagging tool so as to minimise the cost to business, in particular small business.
To read the Institute’s full submission on iXBRL click here.
The Institute is actively engaging with Revenue on proposals for iXBRL filing through TALC and Business Reporting Ireland Limited. We will be updating members on iXBRL in our upcoming Annual Conference this month and our Joint Conference with Revenue in June.
Kind regards
Cora O'Brien,
Director
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