By Max Clarke
Following the HMRC’s announcement yesterday on changes to the Corporation Tax (CT) regulations; Phill Robinson, Managing director of IRIS Software & Services has spoken to Fresh Business Thinking about the change and how such changes are likely to affect businesses.
As industry leaders in accountancy software provision, IRIS currently supplies half of the UK’s 28,000 accountancy practices with their software package.
Central to the change is the introduction of Inline eXtensible Business Reporting Language (iXBRL). Although the fundamental rules on how Corporation Tax is calculated remain unchanged, as has the way in which the return is filled; the format of what is sent to HMRC and how, is changing to such an extent that Mr. Robinson has likened the anticipant upheaval to that caused by the Millennium Bug fiasco.
The change has been instigated by HMRC in order to streamline the tax calculation process and make it more efficient. Prior to the introduction of iXBRL, CT returns could be submitted as PDFs of Microsoft excel files, or paper filings that were not universally computer readable; greatly slowing the calculation process.
The new iXBRL provides a universal, computer readable format that still retains the human readability of older methods. IRIS has been encouraging the adoption of the new format among its members, though as yet there remain a large number of accounts that have not adopted the new format, and all IRIS customers should ensure their software is up to date in light of the looming deadline.
Business’ accountants unaware of the change will find themselves facing penalties from HMRC, as at the end of the fiscal year the old PDF or paper formats will not be accepted as all accounts will have to be submitted online using iXBRL. Though most accountants will be aware of the changes, business owners should ensure that theirs are using appropriate iXBRL compliant software. HMRC’s website contains a list of software providers with up to date software.
Problems are likely to be experienced by some small businesses as the change from excel spreadsheets to iXBRL must be executed manually, as it is not yet possible to automatically convert from the former to the latter. This is a laborious task that, especially for small business owners who manage their own accounts, will occupy a lot of time. It is therefore advisable to begin the procedure soon, as the April deadline is rapidly approaching.
To date, of the 254,000 returns received by IRIS, some 58% (147,000) have adopted the new iXBRL format, and IRIS’. Figures from other accountancy software providers including SAGE and DIGITA as yet remain unpublished, and so it is not yet known if this figure is representative of the market as a whole. IRIS has been actively encouraging its members to enact the necessary changes- reflected by the rise to 58% adoption in January up from 50% in September 2010.