Changes to corporation tax filing will be here before you know it...
HM Revenue & Customs (HMRC) has issued a warning to companies about the looming shift to compulsory online corporation tax filing using the Inline XBRL data format.
The changes require all UK company tax returns sent in from April 2011 to be filed online, for accounting periods ending after 31 March 2010, in a specified data format - known as Inline XBRL or iXBRL. Corporation tax payments must also be made electronically from April 2011.
Corporation tax filing: HMRC has warned of looming shift to iXBRL data format
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XBRL stands for eXtensible Business Reporting Language. It refers to a way of tagging financial data so it can be automatically processed by software systems. Inline XBRL makes XBRL readable by humans - guaranteeing the layout and presentation of data looks the same for both the author and the person receiving it, whether it is being viewed online or as a printout.
The benefits of having financial data in a computer-readable format include reduced errors from the rekeying of financial data, faster analysis of the data and reduced costs associated with data processing and filing, according to HMRC.
In order to comply with the new rules, companies must file online - either via commercially available software or by using HMRC's own corporation tax filing software, which is aimed at companies with less complex tax affairs. HMRC said companies can sign up for corporation tax online filing by visiting www.hmrc.gov.uk/ct and clicking on 'Register for Corporation Tax Online.'
HMRC said a wide range of commercial software is already available to comply with iXBRL filing, with more software packages due soon. (For more information on commercial XBRL-compliant software packages, see: www.hmrc.gov.uk/efiling/ctsoft_dev.htm.)
HMRC and Companies House, the UK's Registrar of Companies, have also launched a new joint filing service for company accounts, which means companies with relatively straightforward financial affairs can send their accounts in iXBRL format to HMRC as part of their company tax return, and also send these accounts, or an abbreviated version of them, to Companies House.
Companies wanting to use this service will need to have registered for HMRC Online Services and enrolled for Corporation Tax Online, said HMRC. They will then be able to use HMRC's corporation tax online filing software to submit their accounts to both organisations using a template. (For more information, see: www.hmrc.gov.uk/ct/ct-online/file-return/joint-filing.htm.)
As well as limited companies, HMRC said the shift to iXBRL filing will affect other organisations that pay corporation tax - such as societies, associations and clubs.