A joint letter from the Association of Accounting Technicians, Association of Chartered Certified Accountants, the Association of Taxation Technicians, the Chartered Institute of Taxation (CIOT), the Institute of Chartered Accountants in England and Wales (Tax Faculty) and the Institute of Chartered Accountants of Scotland this week asks the government for a deferral for submitting accounts in iXBRL format – the combined institutes agree that the CT Tax computation filings should proceed as planned. However, the letter is sketchy on detail, makes sweeping claims on behalf of UK businesses and has already come under fire for pandering to SAGE which recently announced delays to its full iXBRL capability.
Initial comments from members of the ICAEW’s blog are critical with one saying, “Wow ,,, our professional bodies are lobbying on behalf of SAGE! EVERY other software supplier - even the smaller ones are prepared for iXBRL! So for most practitioners it is not a concern!”
Another said, “.. very disappointed to see my institute lobbying for this. The institute ought only to get involved in something like this when there is a genuine problem with HMRC's processes or systems, not when an external software supplier has let down their customers.”
Only one comment at time of writing was in favour of a slight delay hinting at problems with tagging IFRS accounts rather than UK GAAP.
This contrasts with the breathtaking claims of the Institutes’ letter, such as “These issues will disadvantage a substantial proportion of UK businesses, with small to medium sized businesses and their agents being hit the hardest, running the risk that precious management time is diverted away from customers and growth towards red-tape and compliance.”
The letter concludes, “The accompanying statutory accounts should be acceptable in either iXBRL or PDF format for a period – we suggest a minimum of six months, to be reviewed as the market progresses.”
However the Institutes are silent on what research they have done to back up their claims, for example, whether they have surveyed their members’ views on the issue and what proportion of UK businesses will actually be affected. It is only in the Appendix to their letter that the signatories seek to justify their position, blaming late delivery of iXBRL compliant software by two suppliers and automatic iXBRL tagging in another product which only extends to a proportion (typically up to 80%) of the items on HMRC’s minimum tagging list.
A further claim is that in some cases expensive replacement of hardware has been necessary in order to support the new software although they have failed to specify what percentage of companies and their agents have been forced to replace hardware, what they have spent or on what research their assertions are based.
John Turner, CEO Corefiling reacted angrily. He told FSN, “It is clear that there is an attempt by one or two large software players to derail HMRC for what appear to be commercial reasons.
HMRC’s policy in relation to the iXBRL mandate has been extremely carefully, professionally and rationally made to the Accounting profession and to corporates right around the country. The timelines associated with the mandate have been well understood for a very long time. Compared to the common practices of tax administrations across the OECD, the timelines have been extremely generous. The Revenue has worked towards the mandate since 2003. The iXBRL mandate is the right policy and should accrue very significant benefits to HMRC, both in terms of administrative efficiency and focussing their investigations in the right places.”
Turner added, “A significant number of software vendors -- old and new -- have invested very heavily, treated the HMRC initiative seriously and are meeting the needs of thousands of customers. They should not be penalised at this very late stage.
There is overwhelming evidence of straight-forward adoption by very significant numbers of Accountancy Practices and corporates all over the UK. The UK accountancy profession and companies around the country are more than adequately served by the more than 30 accredited software products on the market.”
It remains to be seen how the Treasury will react but FSN’s view is that it is unlikely that such a poorly argued and unsupported case is going to convince the government to delay its deadline. As one industry insider said, “We are talking about the starting gun not the finish line.”