By Lesley Meal
Tax Adviser
16 July 2010
It’s easy to understand why HMRC has decided that corporation online filing will become mandatory. In addition to being motivated by Lord Carter’s dream of a brave new online world, with benefits for all, the Revenue (and the government) has much to gain, from reduced input and processing costs to increased potential for data analysis.
It is less easy to understand why there is such a rush. Clearly, the sooner these (and other benefits) are enjoyed by the regulatory authorities, the sooner the government can start reducing the national deficit. But the March 2010 deadline slipped to March 2011 for a host of reasons, and some remain valid: neither software providers, nor tax advisers, not accountants are, as yet, properly prepared.
There has been coverage of the transition in Tax Adviser (December 2009, p24-29), and HMRC has issued a range of guidance (see box, ‘HMRC on iXBRL’), but members of the ATT and CIOT will only be able to handle CT online filing with the help of special software, and most providers have yet to make this available. Until they do, many accountants can only contemplate their options.
Small practitioner Ray Backler has gone out of his way to do this, but he says: ‘I’m still not sure what I need to do.’ His endeavours have, however, helped him to identify the area of the transition to CT online filing that he expects to find most challenging. ‘My biggest concern isn’t the corporation tax return or the computations,’ he says ‘it’s the accounts’. He will not be alone in this.
Backler currently uses a spreadsheet as the basis of accounts production. ‘I just feed in the final year numbers, click a button, and it produces the accounts,’ he says, and then converts that into PDF format. He is well aware that he won’t be able to carry on doing this, and sees his options as either special iXBRL tagging software (such as SeaHorse) or a final accounts production application. (He’s currently veering towards VT Accounts.)
Things may be less straightforward for practitioners who specialise in preparing and filing tax returns, but do not usually get involved in producing accounts. As one tax agent, who wants to remain nameless, comments: ‘I have clients who produce their own accounts and some who use another firm of accountants for this.’ So she will be asking these accounting firms to provide her with iXBRL-tagged versions of the client accounts, but admits: ‘I’m not sure what I’ll do about the others yet.’
At the six-partner firm of Glover Stanbury, partner Kevin Salter has also been assessing his options. ‘We will be relying on the software suppliers to do everything we need doing,’ he says. ‘We use corporation tax software and accounts production software and we already file things online, so I hope that the transition will be seamless,’ Salter explains, and he has good reason to be optimistic.
‘Digita consulted us about the development of its software and gave us options,’ he says, in areas such as: how the user will be able to see where tags have been applied to a set of accounts; how the user will access guidance on which items need to be tagged; and how users can find the tag description that best matches a particular item. ‘I recently saw the software in action,’ says Salter, ‘but it hasn’t been distributed yet.’
As you will see when you look at the HMRC guide to CT online software and forms (http://www.hmrc.gov.uk/efiling/ctsoft_dev.htm), just one final accounts production system currently produces iXBRL accounts: Forbes Accounts. ‘You just click one box, on tools, in the user set-up, and then it’s automatic,’ says managing director David Forbes. Forbes has the iXBRL computation covered too. ‘That’s the easy part,’ he says.
Other specialist providers of corporation tax software and accounts production software are in varying states of readiness, and a number have recently announced that they’re iXBRL computation-ready. The same companies are more reticent about when their systems will be able to produce iXBRL accounts, except to say that this will be before the 2011 deadline – and some expect this to be around October or November.
This is all very well, but as one practitioner observes: ‘By then, we’ll be swamped with self-assessment work, so it couldn’t come at a worse time.’
Software providers have been aware of the move to mandatory CT online filing for years, so why have they left things this late? When asked, the best they can come up with is a range of excuses, disguised as reasons. So, let’s just hope that everything goes like clockwork when the iXBRL software eventually arrives, because many advisers will be testing these systems perilously close to the filing deadline.
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