UK plans to make XBRL mandatory will bring major benefits for government and business
9 June 2006
UK government plans to make XBRL mandatory for filing of company accounts and tax returns will provide significant benefits for both government and business, the architect of reforms to UK tax filing told an XBRL conference in London.
Lord Carter, who proposed a range of reforms to HM Revenue and Customs (HMRC) online services which have been accepted by the government, said the introduction of XBRL would lead to smarter government and would reduce costs, providing benefits for all.
The use of XBRL would help avoid the potentially devastating errors which were caused by rekeying, he told an audience of some 150 accountants, software developers and government officials. It would also enable machines to take over low-value tasks and reduce the amount of time which government and business spent trying to get data right.
The challenge was now for HMRC to provide an efficient on-line service based on XBRL, Lord Carter added. “Confidence is the key – people must have confidence in the workability of the system.”
The conference, sponsored by the Institute of Chartered Accountants in England and Wales (ICAEW) and XBRL UK Limited, was arranged to explain the UK government’s plans for new e-filing services.
Companies House, the official body for receiving company financial statements in the UK, recently launched a service for accepting accounts for small companies in XBRL. It told the conference that it had so far received some 28,000 company accounts in XBRL and was expecting this number to rise significantly in coming months. Its XBRL service for audit exempt companies, which form a large proportion of some 2.3 million companies in the UK, had already provided significant benefits and will be steadily expanded to cover to cover larger companies with more complex financial statements.
HMRC has also launched a service for receiving tax computations in XBRL and is planning to set up a single gateway for e-filing with Companies House. In its March budget, the UK government accepted recommendations from Lord Carter that use of XBRL for company accounts and tax should be mandatory from March 2010.
This was an ambitious but realistic timetable, Lord Carter told the conference held at the ICAEW on 9 June. It was important to drive up the utilisation of electronic services.
A reason for mandation was that the UK was still using 19th century institutions to cope with 21st century issues and “had got through the 20th century with chicken wire and duck tape”, he said. The UK had quickly to upgrade its systems and approaches to cope with current challenges, including the need to save costs on administration and boost efficiency.
“We should not under-estimate our capacity to achieve this.”
In order to be ready by 2010, HMRC and Companies House required a fully operational service for accounts and company tax based on XBRL by April 2008.
XBRL would enable cuts in manual effort and provide intelligent data which could be processed by software. It was the only available route to achieve effective e-filing, Lord Carter said.
The challenge now was for HMRC to get its customer interface right, make its systems robust and make its services trusted in every sense, he said. There would be challenges and transition costs, but the goals were achievable.
Jo Jones, programme manager for e-services at Companies House, told the conference that Companies House wanted “to change the way in which we do business: by transforming the 230 tonnes of paper and 7 million paper documents a year, into electronic transactions.”
The use of XBRL was already providing significant benefits for submitters of accounts and Companies House, she said.
It enabled consistent validation, reduced rejection rates, fast notification to accounts preparers, minimal human intervention and reduced costs.
Other speakers explained HMRC’s plans for using XBRL; how software vendors had introduced XBRL in their products; opportunities for saving money with e-filing; the accountants’ business case and plans for a comparable XBRL filing project in The Netherlands.
Main presentations from the conference can be found at http://www.xbrl.org/uk/9June2006/.
Announced by:
Peter Calvert
XBRL International
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