1. e-Services Programme XBRL and Company Tax e-filing 21st May 2003 Jeff Smith Service Development Leader Inland Revenue (UK) CT e-services

2. Agenda Background UK Government approach to company regulation e-business objectives Summary of the project The Company Tax Return Phased approach Timing - what and when Business benefits - for customers & the Inland Revenue Approach to taxonomy development

3. UK Government aim for simplification & modernisation Looking to simplify and reduce regulatory burden on companies Company Law Reform Simplification of tax rules e-business has an important part to play

4. E-business objectives “The government is committed to making the delivery of all its services available electronically by 2005” “It is also committed to ensuring that the services it delivers should be responsive to users' needs, easy-to-use, flexible and efficient.” http://www.inlandrevenue.gov.uk/ir_strategy/intro.htm e-filing of Company Tax Returns is part of this programme we receive over 1,000,000 CT Returns each year the vast majority are from small companies (only 10,000 public companies)

5. The Company Tax Return & the e-filing solution

6. Company Tax Return 1 Return form (CT600) 2 Accounts 3 Computations Need ALL three components to make up a valid return Complex information Difficult to put together

7. Computations are complex Accounts figure of profit adjusted for tax purposes capital allowances depreciation etc Often 30 pages + Free format No standard layout Currently paper documents usually produced using specialised software information inaccessible no data flow to IR systems

8. Accounts are also paper based We require full accounts including Profit & Loss Again all held on paper with little data flow to IR systems Limited information available for risk assessment and for Government financial planning Companies required to submit accounts separately to other Government Departments

9. CT e-filing solution Devised in collaboration with customers at a series of workshops accountants are really the “customers” some large companies have a direct relationship with us Picking up on external drive for XBRL Seen as a catalyst for business process change prepared to reconsider our policy and legislation prepared to consider radical ideas - nothing out of bounds

10. XML CT600 XML CT600 XML & XBRL CT Return CT600 form Computations Accounts XBRL Comps CurrentABC CT eFiling - 3 parts - 3 phases

11. A. B. C. 2002200320042005 - Service Development - Live service Phase Finite Life-span Concurrent Development Current Paper process Indicative Phasing Plan Went live 13th March Later Phases??

12. Trial went live on 13th March 2003 Controlled take up throughout 2003 Aim to be proven and fully operational by end of 2003 the most difficult part technically provides infrastructure to build on XBRL phases XBRL phases are relatively straightforward enhancements real challenge is maximising potential for business process change CT eFiling progress Phase A - XML CT600 + attachments

13. Phase B - XBRL for computations Working in collaboration with: KPMG, PwC, Deloitte & Touche, ICAEW plus third party CT software suppliers and XBRL technical support Draft CT computation “taxonomy” published CT computation is output from third party software products On target for October 2003 start IR founder members of XBRL UK jurisdiction vital source of information and support CT eFiling Progress

14. Phase C - XBRL wider impact Scope recently reaffirmed by customers, now discussing implications for: compliance work (how IR make enquiries) IR/agents joint business processes incentives and customer benefits - to drive take-up Working with XBRL UK to demonstrate the business case for XBRL adoption across financial community Will use UK GAAP taxonomy for eFiled accounts Working with accounting software suppliers - integrate XBRL into their products? Next Steps

15. Longer term - beyond Phase C? Considering implications for small company reporting interaction with Company Law Reform standard chart of accounts for very small companies? Even more radical joint process change? Drill down to underlying data? Sharing risk rules? Real time enquiries? Shorter enquiry window? Single filing of accounts for all Government purposes? Next Steps

16. Business Benefits based on CT eFiling using XBRL

17. XBRL e-filing Business Benefits Immediate & longer term

19. Wider use across Government

20. IR is probably in the lead for UK Government Departments on XBRL development but work is co-ordinated by the Office of the eEnvoy have recommended XBRL for use by Government Departments Companies House the most obvious read across from accounts filing, but interest from: Office for National Statistics Financial Services Authority Customs & Excise Wider use across Government

21. Approach to taxonomy development

22. Taxonomy development The problem: Computation is essentially free-format with no standard content taxonomy must support total flexibility must not constrain the information that customers want to provide and the way in which they lay out the information The solution: So far XBRL has met the requirements for flexibility without imposing constraints

23. Taxonomy development Started with a simple taxonomy derived from real examples of computations first draft had 350 lines (just using Excel) then transformed first in XML and later XBRL Workshops with customers to validate and to add layers of detail cycle repeated 8 times - now have 3,700 “lines” All output available (on Yahoo Group) for customers and software suppliers Taxonomy files, Linkbases, Stylesheets, “Tree” representation for easier review by humans! Done by IR Inspectors XML/XBRL specialist skills required

24. Questions? Jeff Smith Service Development Leader CT e-Services Jeff.Smith@ir.gsi.gov.uk