1. Agent Road Shows
Practical Experiences in the UK of Introducing XBRL for Taxation to the Business Community Jeff Smith HM Revenue & Customs Business Customer Unit

2. Today’s agenda Some background – what we are doing and why.
Agent Road Shows
Today’s agenda
Some background – what we are doing and why.
Current progress towards our target date of 2011.
Inline XBRL (iXBRL)
E-filing & iXBRL impact and issues for companies and accountants.
XBRL benefits to HMRC and to UK companies.
Other current XBRL issues – not HMRC specific.

3. Background – what & why

4. Agent Road Shows
HMRC aiming for universal electronic filing of tax returns by businesses and IT literate individuals by 2012

5. Independent review made recommendations for Company Tax Return filing
Agent Road Shows
Independent review made recommendations for Company Tax Return filing
All companies should be required to file their company tax returns online, using XBRL, and make payments electronically, for returns due after 31 March 2011
HMRC should continue to work with Companies House to provide a joint filing facility by 2011

6. The basic requirement – e-filing a 3 part Tax Return
Agent Road Shows
The basic requirement – e-filing a 3 part Tax Return
Return form (CT600) - XML
Accounts - iXBRL
Tax Computations - iXBRL
Need ALL three components to make up a valid return.
No standard layout or content
full accounts as submitted to Companies House – not limited to specific financial data items.
Tax computation may be anything from two pages to one hundred pages +.

7. Current progress

8. Agent Road Shows
Current progress
262,539 CT600 Company Tax Returns were received online (but NOT using iXBRL) in the period from 6 April 2008 to 31 March ,295,228 Returns were received on paper in the same period
CT600 Company Tax Returns received online to 31 March 2009 accounted for 16.85% of the total number of CT600s received in that period
1,364,869 companies have registered to use the CT online service
20,469 agents had registered to use the CT online service at 31 March 2009
April 2008: 111,891 paper returns / 14,551 online (11.5%)
April 2009: 64,641 paper returns / 23,717 online (26.8%)

9. iXBRL service - Implementation Timeline
Agent Road Shows
iXBRL service - Implementation Timeline
Test Services available in April 2009 – for tax software developers.
Main legislation already in place – with further regulations published in May/June 2009 for public consultation and enactment in Autumn 2009.
New CT Online Service (iXBRL) released Autumn 2009
HMRC CT Online product launch in Autumn 2009
Mandation of online filing and electronic payment for all CT returns using XBRL standard - April 2011

10. Inline XBRL (iXBRL)

11. Why Inline XBRL [iXBRL]?
Agent Road Shows
Why Inline XBRL [iXBRL]?
HMRC’s strategic solution for rendering of accounts and CT computations – the CT600 will remain as XML
Follows the XBRL International Standards Board’s approval, on 2 July 2008, of the iXBRL Rendering Specification
Previous solution – stylesheets – proved to be very difficult to create and amend, even for simple accounts. Fixed formatting and presentation would be unwelcome by many companies.
iXBRL preserves all presentational aspects – branding, formatting, terminology – HMRC’s Inspectors see exactly what companies and agents send.
Use of XHTML allows XBRL tagging only as required – has greatly simplified tagging of the tax computation.

12. Agent Road Shows
Inline XBRL [iXBRL]
Software developers regard iXBRL as a very good solution
Proving easy to implement, even with little or no previous experience of HTML/XHTML.
Little demand for a stylesheet based solution!

13. E-filing & iXBRL impact and issues for companies and accountants

14. XBRL impact on smaller UK companies (98% of the total)
Agent Road Shows
XBRL impact on smaller UK companies (98% of the total)
HMRC building a free software product that will enable smallest companies to e-file a Company Tax Return – using a standard layout and content for accounts and tax computations.
Virtually all accounts are produced by an accountancy firm on behalf of the company and are audited by the same firm.
Accountants use accounts production software – and most software companies are aware of XBRL and are enhancing their products in time for 2011 – but unclear when all products will be on the market.
Tax software almost universally used – products are expected to be iXBRL ready and general acceptance that not a problem.

15. Agent Road Shows
Accounts production is the challenge for very large UK companies – probably our main concern
Sophisticated ERP and underlying systems create management and consolidated accounts.
‘Statutory Accounts’ (those required by UK Company Law for submission to company regulator and HMRC) are often seen as an overhead for internal tax departments to deal with.
Statutory Accounts production is largely a manual process and Word or Excel based – this is almost always the case even in the largest multi-national companies.
Looking at possibility of allowing a reduced set of tags (c 1200) to be used for an interim period before requiring full accounts tagging.
Tax departments responsible for a large group of companies may have to prepare 500 Company Tax Returns – and 500 sets of Statutory Accounts and tax computations.

16. Agent Road Shows
Accounts production is the barrier for very large UK companies – probably our main concern (2)
Companies generally were unwilling to think about requirements when mandatory e-filing using XBRL was announced in 2006.
We are raising awareness – e.g. recent letters to Finance Directors and Tax Directors have made an impact.
Many large companies are telling us that they have just about enough time to plan and prepare – but others are uncomfortable.
Key factors:
Software products - becoming available all the time – with varying degrees of sophistication and cost.
Joint approach with Companies House – expect to be clarified soon.

17. XBRL - benefits

18. HMRC benefits HMRC will use iXBRL-tagged data to:
Agent Road Shows
HMRC benefits
HMRC will use iXBRL-tagged data to:
Improve risk profiling and reduce the administrative burden, especially on compliant companies
Improve financial modelling – used to provide Government with an assessment of the impact and cost of potential changes to tax policy and specific tax proposals
Conduct more effective ‘interventions’ with fewer requests for information from companies or their agents that can be analysed from iXBRL submissions
Provides the basis for future improvements in financial reporting and financial reporting processes generally – whilst using an international and financial industry- wide standard

19. Customer reactions & benefits
It’s not just about tax!
Customer reactions & benefits
Companies generally slow to recognise the wider benefits of XBRL
Automated exchange of data between systems
Improved business processes
Improved usability of financial reports
Increased data quality
Lower costs of data capture
Flexible, extensible and comprehensive data collection
Reuse of data
Freeing up of resources for data analysis
Reduction in time to publish data
Companies are often in the very early stages of understanding what XBRL may mean to them and in recognising that the time is right when they have other priorities and economic challenges.
But already finding acceptance of the potential to streamline and integrate internal financial systems and to consider longer term benefits.

20. Other current issues

21. Other current issues or influences – not HMRC specific!
Agent Road Shows
Other current issues or influences – not HMRC specific!
Impact of XBRL on audit and assurance processes and standards.
Under consideration by the Institute of Chartered Accountants in England & Wales.
Taxonomy ownership and long term maintenance.
Coverage of IFRS taxonomy
UK extensions being created by XBRL UK Ltd.
How/when XBRL might be extended to other aspects of UK and EU financial reporting.

22. Contact details
Jeff Smith