New online filing system should be ‘delayed’
Concerns have been expressed over plans by HM Revenue and Customs (HMRC) to make the online filing of company tax returns in a new format compulsory.
The proposals will mean that company tax returns must be completed and submitted in iXBRL format.
iXBRL, which stands for inline eXtensible Business Reporting Language, is a computer language based on XML. While XML has been a standard code for some years, iXBRL is not commonly used.
Now the Chartered Institute of Taxation (CIOT) has voiced worries that many companies will not be ready for the changeover planned for April 2011 when the new format is due to become compulsory.
Proposals by HMRC to make iXBRL mandatory are out for consultation at the moment.
Given the limited amount of time remaining, the CIOT wants a deferral of the implementation or an embargo on penalties for the first year.
John Whiting, the CIOT’s director of tax policy, said: “Some accounting periods for which statutory accounts will need to be submitted in iXBRL format to HMRC, under the proposals, have already commenced, yet there is virtually no accounting software available. The changeover is likely to be costly and problematic, especially in the first year.”
Further concerns exist over the absence so far of any agreement with Companies House on going ahead with the new system.
This, the CIOT said, could result in companies facing the extra burden of meeting a higher standard of filing accounts for HMRC than for Companies House.
Instead, the CIOT is arguing for a trial period in which businesses can test the new format.
Mr Whiting continued: “Most businesses and tax advisers would like to have a dry run submitting accounts and returns online for a year before mandation is implemented to ensure that the system is robust. However, due to the long lead time necessary to implement new accounting systems, time to do this has all but run out.”
HMRC is set to be the first major organisation to introduce the use of iXBRL.