KPMG XBRL

iXBRL Accounts
for UK Tax Filing

Jon D’Arcy

30 November 2011

Contents

• Who, What, Why, When • Tagging and taxonomies

• From XML to XBRL to iXBRL • Accounts conversion

• Adoption of XBRL • Auditor considerations

• Filing with Companies House • Non-audit services

• XBRL implementation in the UK • What should companies do now

• Filing formats • HMRC Soft Landing

• Group accounts

© 2010 KPMG, an Irish partnership and a member firm of the KPMG network of independent member firms affiliated
with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in Ireland.
1

Lord Carter’s 29 key recommendations

The universal electronic delivery of
business tax returns by 2012.

 SA – April 2008
 PAYE – April 2009
 VAT – April 2010
 CT – April 2011

2

iXBRL – Who, What, Why, When

WHO?

• All companies which are required to submit a tax return
must comply


3


WHAT?

• In-line XBRL (iXBRL) is a web based computer language
which is designed to be readable by users (via a web
browser) and computers

• HMRC have announced that submission of tax returns and
financial statements in iXBRL format will become mandatory


4


WHY?

• HMRC will be able to electronically review accounts and
automatically identify inconsistencies and inaccuracies through
ratio analysis and electronic profiling. It will also facilitate the
identification and closure of tax loopholes

• The process will give HMRC paperless storage providing quick
and easy access to significant volumes of information.


5


WHEN?

• All corporate tax returns filed after 31 March 2011 must be
in iXBRL format along with supporting computations and
accounts


6

From XML to XBRL to iXBRL

• The extensible Markup Language XML was created so that richly
structured documents could be used over the web
• XBRL was designed to make it easier for computer software to
automatically communicate, exchange, read, process and analyse
financial information (as data). It cannot easily be „read‟ by people and
XBRL tagged files cannot easily be used to reproduce a financial
source document in its original format
• In-line XBRL (iXBRL) combines HTML (a text based language
designed to display data) and XBRL tags, people can open iXBRL files
(using a web browser) and see the original content and format of a
document, while the tagged XBRL data can be stripped out and
automatically processed by software

7

XBRL v iXBRL

8

Adoption of XBRL

• XBRL is being adopted by numerous
governments, regulators, companies and organisations across the
world
• Several European regulators and other information gatherers have
already made XBRL their preferred or mandatory format for receiving
data
• In 2009 the Securities and Exchange Commission (SEC) in the United
States committed to the phased, but ultimately mandatory, transition to
XBRL for filing quarterly and annual financial results
• Revenue in ROI have outlined that they intend to accept voluntary filing
of iXBRL accounts in 2012 and mandatory for some classes of
corporates in 2013

9

Filing with Companies House

• As it currently stands, most companies will need to file company
accounts separately with HMRC and Companies House
• The two are working together to align their services and create a joint
filing facility which may reduce the administrative burden for some
businesses
• Companies House launched its iXBRL filing service for unaudited
accounts of small companies in August 2010 (full set was to be by
Summer 2011, but not met)
• HMRC and Companies House do offer a template-based „Joint Filing‟
software tool, suitable for smaller companies

10

XBRL implementation in the UK

• All UK Company Tax Returns (CT600s) for accounting periods ending
after 31 March 2010 and submitted after 31 March 2011, must be filed
online with accompanying accounts and computations in iXBRL format
• The exact filing date and accounting period end dates were very
important on first implementation
− The requirements mostly applied first to companies with a 30 Sept 2010
year end
− However, some companies were able to avoid the requirements for one
year if they were able to finalise their accounts and file their tax return
quickly afterwards ie 30 April, 30 June, 30 Sept and even some 31 Dec 10
year ends (normally you have 12 months to file your tax return in the UK)
− Hence for some companies with a 31 Dec 11 year end, this is their first year
of adoption

11

Filing formats
CT600 Form

• Filing requirements Statutory Accounts

Computation

− XML Corporate Tax Returns
− iXBRL Corporate Tax computations
− iXBRL Legal entity accounts (UK GAAP or IFRS)
− iXBRL Group Accounts (UK GAAP or IFRS)
− The whole of a company‟s annual report, including the directors‟ report, etc.
will need to be submitted in iXBRL format. Any supplementary reports and
schedules that do not form part of the accounts or financial statements per
se may be submitted in PDF format
• If accounts are not filed in iXBRL along with Tax Return, the entire
submission will be rejected

12

Group accounts

• For UK registered companies, Part 15 of Companies Act 2006 requires
every company, including group holding companies, to prepare
individual accounts (S.394)
• Companies required to prepare group accounts must deliver both those
and their own individual accounts as part of the company tax return.
• Parent companies must send individual accounts using iXBRL but may
choose to send their Group accounts as a PDF. A single consolidated
account can be submitted, if it contains the iXBRL information about the
parent company that would have been provided by iXBRL tagged
individual company accounts

13

Tagging and taxonomies

• HMRC has published lists of items in the accounts and corporation tax
computations that it wants to be tagged. These lists are like dictionaries
and are called taxonomies. Not every number or disclosure needs to
be tagged, only those on these lists should they be present in your
accounts
• HMRC has published a minimum tagging list for UK GAAP accounts
and UK IFRS accounts (valid until 2013)
• The minimum tagging requirement means that for each line in the
accounts, a tag must be attached if the item or financial reporting
concept in question appears in the minimum tagging list of the
appropriate taxonomy
• Tagging exercise to be repeated on conversion from UK GAAP to
IFRS/FRSME
14

Tagging and taxonomies - in more detail

UK Regulated Chart of Accounts
XBRL tags required for XBRL tags required for UK XBRL tags required for
tax returns/comps GAAP accounts – legal IFRS accounts – legal
entity entity

HMRC Tax UK GAAP IFRS
Taxonomy Taxonomy Taxonomy

Approx 5,000 tags covering tax Approx 7,000 tags covering UK Approx 8,300 tags
return and computation GAAP accounts Banking and insurance
(minimum tagging list 1,253 tags) extensions available

15

HMRC’s CT Filing Product

• Available since 23 November 2009
• Extended in October 2010 to incorporate fields that Companies House
need and will be the basis for „Joint Filing‟
• Based on CT600(Short) + Supp Pages A, E and J
• Intended for smaller companies with less complex affairs
− Has to be downloaded for each company for each AP
− Previous year‟s figures do not carry forward
− Templates for Accounts and CT comps „impose‟ a format
• Feedback from agents and their rep bodies suggests it‟s unlikely to be
used by them except for, e.g., pro bono work for clubs, small
charities, etc.

16

Accounts conversion

• Fully automated approach - Specialist developers of accounts
production and taxation software (such as, Sage, IRIS and Digita) have
made their products XBRL and iXBRL compliant
• Conversion approach - Word or excel accounts will need to be
converted into iXBRL using a bolt-on software tool (KPMG‟s tool is
called XME)
− Items in the accounts will need to be manually tagged to the
relevant UK GAAP or UK IFRS taxonomy elements. A conversion
tool is not able to automatically embed the XBRL tags in the iXBRL
file
− Tags are retained for future iterations of the same document
template, thus the majority of the work will be required in year one
with only maintenance and updating of the tags in subsequent
years
17

Fully automated approach

18

Conversion approach

Year 1 KPMG XME

Tag statutory
accounts to relevant
Current process for taxonomy
creating statutory Produce
Develop statutory Test statutory
accounts accounts format in MS outputs accounts in
Review changes to
Word iXBRL format
taxonomy or
or MS Excel
accounts disclosures.
Update tags as
appropriate
Review iXBRL
documents
Year 2+

Attach approved
iXBRL document to
tax return using tax
compliance software
(Alphatax)

19

Conversion approach - Option 1:
Fully outsource conversion of accounts

Process

Same process for MS Word or Excel Outsource Party sends
creating statutory accounts tagged client the iXBRL file for
accounts in MS & converted by review
Word or Excel Outsource Party & submission

Approach
• Generally suited to companies with limited no of entities (15/20) and/or
limited finance resource

20

Partially outsource conversion of accounts

Process

MS Word or Excel
Same process for
accounts template(s) Outsource Party sends Client uses templates to
creating statutory
tagged client iXBRL accounts type accounts and
accounts in MS
& converted by template file(s) submit to HMRC
Word or Excel
Outsource Party

Approach
• Generally suited to companies with large number of entities and
reasonable finance resource
• Templates (Complex trading, simple trading, holding, dormant)

21

Use conversion software to manage process in-house

Process

Same process for MS Word or Excel
Client converts
creating statutory accounts tagged
accounts to
accounts in MS using software tool by
iXBRL and submits
Word or Excel(a) client in-house
Notes: (a) Some modifications to templates will be made to enable or make more efficient
Finance processes will need to be revised accordingly

Cost
 License fee based on size of company, number of entities and users (nominal cost)
Implementation support dependent on level of handholding required
 Training
 Help with template production
 Help with process design
 Help with tagging of templates
 Testing, dry runs, submission

22

Template pre-forma approach

23

“Form filler” approach

24

Conversion - What do you need to do?

4. Ensure the correct
3. Click the tag
period (context) has
icon been selected

2. Highlight the
1. Find the correct number or text to be
disclosure from the tagged
listing
25

Conversion - What do you need to do?

Your accounts department: Government HMRC
Gateway

Per Tag:
Tag Description HMRC Database
Balance Type: Debit/Credit
Data Type: Monetary/Text/Statistical
Period Type: CY/PY/Value at Given Moment
Value XBRL
Type of Asset Class Tags
Owned/Leased Assets
Type of Equity Class
Continued/Discontinued Operations
Legal entity
Segmental/Divisional Analysis iXBRL file
Geographic Analysis (accounts +
tax returns/
comps)

Taxonomy MS Word/Excel Accounts
26

Fully automated approach v conversion approach
• Fully automated accounts production
− More work upfront: need to revise entire legal entity/group accounts process
− Significant finance resources required (availability/other priorities?)
− More expensive
− Automated end to end accounts production (Group and Stats) and iXBRL filing
− Can be used for Foreign GAAP accounts production and/or within SSCs
− Fully automated workflow and audit trail functionality
− Ongoing maintenance relatively straightforward
• XBRL Mapping tool (KPMG‟s XBRL Mapping Engine [XME])
− Quick implementation: bolts onto existing Word/excel accounts
− Low cost
− Only deals with iXBRL filing and TB mapping
− Ongoing maintenance can be time consuming
27

Auditor considerations

• The Auditing Practices Board Bulletin 2010/1 “XBRL tagging of information in audited
financial statements – guidance for auditors” discusses the impact of the use of XBRL
on financial statement audits and outlines factors to be taken into account in providing
non-audit services relating to XBRL to audit clients
− ISAs (UK and Ireland) do not impose a general requirement on the auditor to
check XBRL tagging of the financial statements as part of the audit
− Because the XBRL tagging is simply a machine-readable rendering of the data
within the financial statements, rather than a discrete document, it does not
constitute „other information‟ as defined in ISA (UK and Ireland) 720 Section A.
Accordingly the requirement of ISA (UK and Ireland) 720 Section A for the
auditor to „„read‟‟ the other information for the purpose of identifying material
inconsistencies or material misstatements of fact is not applicable to XBRL tags
− APB will consider the needs of users and the extent to which an audit of
financial statements should be expected to provide assurance on the accuracy
of the tagging process. It is also possible that regulators may require auditors to
provide assurance on XBRL-tagged data at some stage in the future

28

Non-audit services

• Audit clients may request various non-audit XBRL related services to
be performed by its auditors. These may include:
− Performing the tagging exercise;
− Providing a service to the directors of the company as to accuracy of the tagging performed
by management (e.g. by undertaking an agreed upon procedures engagement);
− Providing advice on the selection of individual tags;
− Supplying accounts preparation software that automates the tagging;
− Training management in XBRL tagging

• Subject to compliance with the ASBs Ethical Standard (ES) 5 (and
specifically the management and self-review threats) auditors can
provide XBRL services to audit clients (also subject to any SEC
restrictions)

29

What should companies do?

• Start planning immediately
• Establish the extent to which the business is affected
• Identify any necessary changes and the preferred approach
• If necessary, decide who will be responsible for addressing and
managing the impact
• Eliminate unnecessary companies/agree pro forma accounts
template/agree proforma template for similar companies)
• Pilot test submissions
• The main impact of the new requirement is unlikely to be filing the
corporation tax return and computations, but rather on converting or
preparing company accounts in iXBRL, and assigning the relevant tags
from the appropriate taxonomies
30

HMRC Message – “Soft Landing”

The key is working together:
• Help and support in the implementation phase
• Appreciate not everyone will get it exactly right first time
• Particularly sympathetic approach to penalties in first two years
but flexibility beyond that
− Reasonable Excuse
− Reasonable Care
• Working with you to get it right

31

Thank You

Presentation by Jon D‟Arcy

Our contact details:

Jon.darcy@kpmg.ie or +44 (0) 289 089 3863

© 2010 KPMG, a partnership and a member firm of the KPMG network of independent member firms affiliated with
KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

The KPMG name, logo and "cutting through complexity" are registered
trademarks or trademarks of KPMG International Cooperative ("KPMG
International").

33

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