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Ixbrl Filing - Are You Ready?

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Ixbrl Filing - Are You Ready? iXBRL Filing - Are you ready? What does this mean for your business? In July 2012 Revenue announced that from What is XBRL (eXtensible Business Reporting 23 November 2012 all companies would Language and iXBRL (Inline eXtensible Business Reporting Language)? have the option to file iXBRL financial statements with Revenue and that the XBRL is a computer-readable language for reporting submission of iXBRL financial statements financial information. It is similar to bar-coding financial information within a set of financial statements so that it would be mandatory for all companies becomes computer-readable. “Tags” are assigned to each dealt with by the Large Cases Division piece of information within the financial statements and (“LCD”) of Revenue in respect of tax returns this assignment allows the information to be read by the filed on or after 1 October 2013, relating to Revenue’s computer system. accounting periods ending on or after 31 iXBRL combines “human-readable” information and December 2012. computer readable data with the output being a document (i.e. financial statements) that looks like a Word or Excel In June 2013 Revenue announced that the document but which has electronic tags embedded within it. This allows smarter data handling by the Revenue and submission of iXBRL financial statements should lead to the Revenue focussing their attention on will be mandatory for non-LCD companies in identified risk areas. respect of tax returns filed on or after 1 October Tax computations 2014, relating to accounting periods ending on or after 31 December 2013. This mandation Unlike the practice in the UK, the Irish Revenue has date will not apply to entities who meet all decided that there will be no obligation to file iXBRL tax computations for the foreseeable future. In time, it is likely three of the iXBRL exemption criteria (balance that tagging tax computations will be mandatory but any sheet value not exceeding €4.4m and turnover plans for this have been placed on hold for now. not exceeding €8.8m and average employee Revenue has stated that for companies subject to numbers not exceeding 50). These ‘exempt’ mandatory iXBRL, filing tagged financial statements will companies will be mandated in 2015 at a date now form part of the tax return. still to be decided by Revenue. Revenue has also confirmed that the submission of the Currently financial statements may be uploaded iXBRL accounts and the submission of the tax return can be done separately and at different times. In the UK, before, simultaneously with or after the significant problems arose due to the requirement that corporation tax return. However, Revenue the iXBRL computation, return and accounts all had to expects that the financial statements would be filed electronically at the same time. Tagging errors in the accounts resulted in whole tax returns being rejected. be filed within 21 days of the filing of the This has been avoided on the Irish adoption of iXBRL so corporation tax return or after the due date for tagging errors in financial statements will not prevent tax the return, whichever is later. returns from being successfully lodged with the Revenue. Penalties for non compliance the debtors tag would be attached to to ‘tag’ a number of specific data items the debtors value on the face of the on the Financial Statements (as outlined Similar to the rollout of the electronic accounts). on the HMRC Minimum Tag List). filing of tax returns through Revenue On-line Service (ROS), the Revenue Revenue has stated that they will Tagging accounts – options is planning on taking a soft landing accept accounts prepared in accordance approach to this project. Revenue with the GAAP and IFRS published There are broadly two options available recognises that the move to iXBRL taxonomies supplemented by “Irish to a company in terms of the approach will be a significant change for some extensions”. to tagging financial statements. tax payers and has stated that it will The taxonomy list and versions not impose late filing surcharges or u Conversion tools accepted by Revenue may change over other penalties in respect of errors in When a set of financial statements time e.g. year on year as concepts are the creation or filing of iXBRL tagged is prepared, each item can be added/modified. In general Revenue financial statements for a period of “tagged” with an appropriate tag will support and accept versions 2 years following mandation where from the taxonomy – this involves a of taxonomies which have been a taxpayer has made reasonable tag being “dragged and dropped” superseded for a period of 18 months efforts to comply with their onto each individual item in the from the date the newer version of the obligations. financial statements. taxonomy has been accepted. However, it is likely that this soft The software then embeds XBRL landing approach may only last for a Revenue has mandated the “full into the entity financial statements short time after roll out. tagging” of financial statements (Excel and/or Word documents) and including the Directors Report, converts the output to the required Auditors Report, Profit & Loss account, Tagging and taxonomies iXBRL format. Balance Sheet, Notes to the accounts, iXBRL tags are interpreted by reference Cash Flow statements and Statement Converting Microsoft Word or Excel to “taxonomies”. A taxonomy is, in of Total Recognised Gains & Losses financial statements probably offers essence, a dictionary, linking each (this list is not exhaustive). Notes on the most commercially viable solution tag with the concept it identifies. Pensions and Financial Instruments do with the least disruption. Taxonomies are open-source not have to be tagged. u Accounts preparation software documents published on the Internet. With the exception of the However, some organisations may They represent electronic charts of aforementioned exclusions, all data see the transition to iXBRL as an accounts and are designed to mirror items presented must be tagged opportunity to make the accounts the standard form and layout of a including comparative period figures. preparation process more efficient typical set of statutory accounts. There If a data item appears more than once by replacing the current approach are taxonomies for most accounting then it must be tagged each time. In with a fully automated end-to-end standards worldwide including the circumstances where a financial report accounts preparation solution. various GAAP and IFRS standards. Each data item or concept does not have a Accounts preparation software can taxonomy includes several thousand matching (GAAP or IFRS) taxonomy be purchased and will produce the “tags” which in turn mirror a specific tag, the data concerned should simply financial statements with iXBRL accountancy concept found in the be left as plain text. tags automatically built in. statutory accounts. The process of tagging requires a user to match a tag In contrast to Revenue’s full tagging A downside to this approach is that to the appropriate item on the face of approach, it should be noted that UK it can be expensive and has internal the statutory accounts (for example Corporation Tax filers are only required resource requirement implications. Automatic tagging? and an expert technical understanding and appended to the consolidated of iXBRL to ensure a satisfactory level accounts such that one document in Certain iXBRL vendors have stated of compliance. iXBRL format can be submitted. In that they can automatically tag a set of addition, Revenue expects the holding statutory accounts with their solutions. Dormant company exemption company only balance sheet to be The idea behind this is that their solution tagged. The Notes to the Accounts, can automatically locate accounting Companies that are inactive may Directors Report and Auditors Report concepts on the face of the accounts approach their tax district to seek should include such tagged disclosures and then automatically apply the correct permission not to file returns for the which are relevant to the holding tag to said item. This functionality relevant periods of dormancy. In such company only. should be treated with a great deal of circumstances, Revenue are willing to scepticism based upon the feedback exempt a company from the obligation of clients who used these automatic to file financial statements in iXBRL New GAAP tagging solutions. format. Revenue classify a company In March 2013, the Financial Reporting as inactive, and hence exempt from Council finalised the third in a suite of These tools effectively use an advanced their filing obligation, where there is new standards (FRS 100, 101 and 102), word search to locate the correct tag. no activity in the accounting period which will be effective from 1 January As such the word “Turnover” will be and define no activity in an accounting 2015, setting out the accounting searched for by the tool and then if the period as being where there is: and reporting requirements that the tool locates it, it will attach a tag to the majority of unlisted companies who number values adjacent to the located u No income or expenses on the currently use Irish/UK GAAP, will word. The limitations in this approach Profit and Loss account (annual be using into the future. The new are obvious and numerous: CRO and audit fees can be accounting standards require or permit ignored); and u Any items on the accounts (such as companies to prepare their accounts current assets) which may have no u A balance sheet movement of less using different conventions, involving text identifying them, but are still than EUR500 (except in the first a reduced disclosure framework, mandatory tags, may well be missed year after the company becomes compared to those currently applying inactive where an inactive under Irish/UK GAAP or IFRS.
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