It’s the first week of January. Like many people in the United Kingdom I have my tax return to submit by the end of the month. Such an odious chore! And so I have passed this on to my accountant.
These days giving her the excel spreadsheets is only part of the story. She then has to submit the data electronically and in a particular format. That format is eXtensible Business Reporting Language (XBRL).
To her it seems like an added administrative overhead. It’s the last thing she needs when she has a lot of them to do. Why couldn’t they just stick with the old way of doing things?
Yes, it’s frustrating when dealing with such a significant change. A change that affects every business in the United Kingdom. EVERY BUSINESS! From the small to the huge.
From the Mum and Dad sandwich van to the hi-tech entrepreneur. Everybody!! The accountants and specialists are busy again.
Before I go and give my two pennies worth let me back up a little and give a quick account of what I think XBRL is. If you want accuracy go read Wiki!
XBRL is a global standard for the exchange of business information between IT systems.
The concept behind XBRL was championed by Charlie Hoffman. His concept was that business information could be processed and analyzed far more readily by a software application if it were created as tagged text. But simple text files are not enough, what was required was an international standard for this tagging. An international standard that would facilitate the exchange of financial information between financial IT systems across the globe.
This international standard became realized as XBRL, formulated by extending an existing, proven technology XML (Extensible Markup Language) used extensively in the world of Software for exchange of generic data between IT systems.
So what has that got to do with UK companies? The UK tax authority have mandated that all UK companies should use it to improve the efficiency for assessment of their accounts and to validate that they are paying the correct amount of tax.
Through XBRL crunching IT systems, the UK tax authority plan to improve the efficiency of tax collecting. These systems will help them ensure that the right amount of tax is being paid. Making it more efficient and error free process for all tax payers, reduce administrative costs and above all allow them to target those companies they feel that are not paying their fair share.
Rather ambitious!
However these improvements mean more money can be spent on schools, hospitals, roads, all that other good stuff – all through getting more tax revenue and reducing administration costs.
However that still leaves my accountant having to cope with XBRL. I wish her good luck!