CoreFiling takes the sting out of iXBRL filings for HMRC

17th December 2009

A major shift in the way that companies submit their Corporation Tax Returns (CT600s) and Annual Accounts to HMRC is on the horizon. Most returns due after the 31st March 2011 must be filed online using the XBRL format for both the accounts and computations including the CT600 form. HMRC says that for most companies the change to XBRL (actually iXBRL) will be “behind the scenes”, with the software taking care of the technicalities. But whether this works out in practice will depend greatly on the tools selected for the job.  As things stand, there is a shortage of solutions that are easy to use and which satisfactorily buffer end users from the complexities of XBRL says Gary Simon, FSN’s managing editor.

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It is a position very familiar to CoreFiling, a company that has been steeped in the development of XBRL from its inception, helping regulators around the world (including HMRC) automate and hone their processes as they prepare to accept XBRL driven submissions. This unique vantage point has given CoreFiling the know-how to bring to market some of the most advanced tools to help businesses convert their accounts into an iXBRL compliant format without changing their underlying processes.

What is XBRL?

XBRL is a derivative of XML, a computer readable mark-up language that supports the electronic communication of business and financial information using a system of uniquely defined tags to precisely define the data being exchanged. These definitions are held in Taxonomies, which are like dictionaries containing all possible terms and  common, pre-defined reporting structures with distinct captions like a chart of accounts. The idea is that companies “map” their numeric / textual report data to the items within the taxonomy and submit the resulting XBRL data files to their financial authorities – HMRC in this case. The challenge leading up to the HMRC deadline is to make this mapping as intuitive as possible whilst retaining high levels of accuracy.

A slight twist in the implementation of XBRL in the UK is that it requires the adoption of a specific enhancement of XBRL called iXBRL or in-line XBRL which allows the same submission to be viewed in machine readable or human readable format in the same document - rather like electronic ‘skins’. By toggling between the two formats an experienced user can view and verify that a set of accounts in HTML format is correctly underpinned by an appropriate (relevant) set of XBRL tags. But if CoreFiling have their way then most users would not need to become familiar with XBRL at all.

How do you generate iXBRL statements for HMRC without turning into a geek?

There are two threads to complying with HMRC’s new requirements, namely; the filing of a tax computation and the annual accounts. In the main, the UK’s leading providers of tax software are expected to cater for the tagging of tax computations and CT600 forms.  Most of the specialist providers of tax computation software have been working on the iXBRL requirements for some time and iXBRL compliant returns will almost certainly be a standard feature of their packages.

But this is not the case with providers of accounting software who are not well prepared for the looming iXBRL deadline.  Furthermore, the vast majority of companies and their professional advisers prepare or finalise their accounts in Microsoft Word and Excel rather than generating them directly from an accounting system. For these businesses, there is no obvious means of generating inline XBRL statements in the timescales laid down by HMRC.

This is where a new product, CoreFiling’s “Seahorse”, provides a welcome solution for hard pressed companies and firms of accountants seeking an accessible and effective solution that turns annual accounts rendered in ordinary Word documents and Excel files into fully compliant iXBRL submissions.

Transforming MS Office files into iXBRL submissions

For most preparers of financial statements XBRL remains something of a mystery. XBRL is widely acknowledged to be a complex language which is relatively difficult and tedious to code and understand. So CoreFiling have designed Seahorse to shield the user from the complexity of XBRL’s syntax. By providing an intuitive interface, coupled with inbuilt artificial intelligence Seahorse can automatically deduce the right tags to use with a high degree of certainty and the minimum of manual intervention.

The Seahorse solution is provided in the ‘Cloud’, i.e. as an on-demand service over the internet. All of the work in the system is provided by an XBRL engine accessed on the web, so that no changes are required to local processes or infrastructure to use the system.

The starting point is to identify a set of company accounts in Microsoft Word or Excel by browsing for the file on a local PC or Server and uploading it to the secure host system on the web  Context-aware, Seahorse references the relevant part of the taxonomy (say UK GAAP or IFRS GAAP) selected by the user and suggests tags based on the terms that it finds. Traffic lighting adds to the simplicity, for example, green, is used to denote close matches whereas amber or red requires further examination. Once complete, the user can review the matches, accept or amend them as required before moving onto the next section.  Once accepted, the tags are ‘inserted’ into the mapping and automatically into any inline documents generated by the system. The inline components of any Word document or Excel file created by Seahorse can be viewed at will by the user who can instantly verify the tags selected for each item of the submission.

It is this intelligent tagging that marks out Seahorse from other solutions which require the user to trawl through the entire taxonomy in search of a tag that they can manually drag to each item of data.

With 4,375 tags in UK GAAP, Seahorse’s ability to automate the process with a high degree of certainty should save an enormous amount of manual effort, with early tests suggesting that the whole tagging process using Seahorse will take considerably less time and effort with the added bonus of  reducing tagging errors.

Making a round trip

For professional advisors that have a standard template for the preparation of published annual accounts the process of tagging is largely a one-off activity, since Seahorse allows the same template to be used for any number of companies without having to repeat the tagging exercise.  But there will also be occasions on which it is necessary to amend the tagging after an iXBRL document is generated.

In these cases, Seahorse allows the preparer of the submission to simply change the ‘final’ iXBRL document and resubmit it to the tagging engine to create a newly revised iXBRL document which is validated against the HMRC requirements before finally being stored on a local PC. This “Round Trip” capability allows iterative processing and more neatly reflects the way that preparers of financial statements are likely to work.

Summary

What stands out about CoreFiling’s Seahorse is that it provides a very capable solution on the web which leverages intelligent tagging to accelerate the tagging process and improve data quality.  Unlike first generation find the tag and drag it solutions, Seahorse does not require any investment in local systems, process change and infrastructure.  At a stroke it reduces accounting and IT complexity allowing companies to convert ordinary Word and Excel files into inline XBRL using a modern cloud-based solution, confident in the knowledge that the provider has the know-how to comply with HMRC’s requirements and the technical ability to produce a dependable solution.

Due for release well in time for accounting firms and companies to be fully prepared, Seahorse should be high on the list of preferred solutions for HMRC iXBRL filing requirements.

Summary table of Seahorse benefits

Issue

CoreFiling “Seahorse”

Other mapping solutions

Time taken

‘Intelligent tagging’ based on inbuilt know how powerfully assists the XBRL mapping process

Seahorse remembers tagging decisions, so subsequent years are effortless.

Rely on manual ‘drag and drop’ technique which is labour intensive

Accuracy

Automated mapping of taxonomies to account lines based on artificial intelligence enables a high degree of accuracy, reserving just ambiguous items for manual checking.

 

Accuracy relies purely on the knowledge and efforts of the preparer to identify the correct tags and apply them consistently.

 

 

 

Technology

Use of standard Microsoft Word and Excel files and tagging ‘engine’ on the web removes the need for any specialised software or infrastructure.

Requires the acquisition and implementation of specialised software tools to run locally on client machines or servers.

Processes

Use of Accounts prepared in Microsoft Word and Excel together with tight integration eliminates the need for any material changes in processes.

XBRL mapping tools resident within ERP solutions and consolidation packages could give rise to substantial changes in processes. 

Skills needed

Levels of expertise of tagging and IFRS are reduced to a minimum by automation

Manual ‘drag and drop the tag’ requires intimate knowledge of HMRC requirements, XBRL technology, and relevant GAAP taxonomies to effect tagging.

 

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