Leading accountancy bodies have "deep concerns" about mandatory iXBRL use...
The main accountancy bodies have expressed doubts over the ability of many businesses to comply with the deadline of April 2011 for submitting tax returns online using the iXBRL reporting language.
In a public letter to the Treasury, the Chartered Institute of Taxation and the five other principal professional tax and accountancy bodies argue that the government should rethink its plans in light of the problems that have surrounded the implementation of iXBRL, despite HM Revenue & Customs' (HMRC) warnings of the upcoming change.
The accountancy bodies disagree with the government's plan to penalise businesses that fail to implement iXBRL correctly because of issues with its implementation, including delays in new software.
The letter also stated that HMRC's proposals for new guidance on online tax returns are "confusing, cloud the issue of what precise iXBRL tagging is required to satisfy HMRC, and fail to address satisfactorily the plight of those still struggling to implement software or having failed to receive it".
The letter did not challenge the use of iXBRL for online tax returns, which stands to provide long-term benefits for businesses and efficiencies for HMRC. But the accountancy bodies argued that businesses "should be given the opportunity to implement software and systems in a measured and methodical manner", and that the current deadline of 1 April precluded this process.
Using iXBRL involves applying tags to every item of financial data, which can then be read by a computer, allowing financial data to be sent between organisations and reducing the chance of errors. Software can also detect errors and gaps in the financial data, making it easier for HMRC to process tax returns.