e-services programme

e-Services Programme

XBRL and Company Tax e-filing 21st May 2003

Jeff Smith

Service Development Leader

Inland Revenue (UK)

CT e-services

Agenda• Background

• UK Government approach to company regulation

• e-business objectives

• Summary of the project

• The Company Tax Return

• Phased approach

• Timing - what and when

• Business benefits - for customers & the Inland Revenue

• Approach to taxonomy development

UK Government aim for simplification & modernisation

• Looking to simplify and reduce regulatory burden on

companies

• Company Law Reform

• Simplification of tax rules

• e-business has an important part to play

E-business objectives

• “The government is committed to making the delivery of all its services available electronically by 2005”

• “It is also committed to ensuring that the services it delivers should be responsive to users' needs, easy-to-use, flexible and efficient.”

http://www.inlandrevenue.gov.uk/ir_strategy/intro.htm

• e-filing of Company Tax Returns is part of this programme

•we receive over 1,000,000 CT Returns each year

•the vast majority are from small companies

(only 10,000 public companies)

The Company Tax Return& the e-filing solution

Company Tax Return1 Return form (CT600)

2 Accounts

3 Computations

• Need ALL three components to make up a valid return

• Complex information

• Difficult to put together

C T600 Form

S ta tu to ry A ccoun ts

C om puta tion

C T600 Form

S ta tu to ry A ccoun ts

C om puta tion

Computations are complex• Accounts figure of profit

adjusted for tax purposes• capital allowances• depreciation etc

• Often 30 pages +

• Free format

• No standard layout

• Currently paper documents• usually produced using specialised software

• information inaccessible

• no data flow to IR systems

Accounts are also paper based• We require full accounts

including Profit & Loss

• Again all held on paper with little data flow to IR systems

• Limited information available for risk assessment and for Government financial planning

• Companies required to submit accounts separately to other Government Departments

CT e-filing solution

• Devised in collaboration with customers at a series of workshops• accountants are really the “customers”

• some large companies have a direct relationship with us

• Picking up on external drive for XBRL

• Seen as a catalyst for business process change• prepared to reconsider our policy and legislation

• prepared to consider radical ideas - nothing out of bounds

XMLCT600

XMLCT600

XML & XBRL

CT Return

CT600 form

Computations

Accounts XBRLComps

Current A B C

CT eFiling - 3 parts - 3 phases

A.

B.

C.

2002 2003 2004 2005

- Service Development

- Live service

Phase

FiniteLife-span

ConcurrentDevelopment

Current Paper process

Indicative Phasing Plan

Went live 13th March

Later Phases??

• Trial went live on 13th March 2003

• Controlled take up throughout 2003

• Aim to be proven and fully operational by end of 2003

• the most difficult part technically

• provides infrastructure to build on XBRL phases

• XBRL phases are relatively straightforward enhancements

• real challenge is maximising potential for business process change

CT eFiling progress

Phase A - XML CT600 + attachments

Phase B - XBRL for computations

• Working in collaboration with:

• KPMG, PwC, Deloitte & Touche, ICAEW plus third party CT software suppliers and XBRL technical support

• Draft CT computation “taxonomy” published

• CT computation is output from third party software products

• On target for October 2003 start

• IR founder members of XBRL UK jurisdiction

• vital source of information and support

CT eFiling Progress

Phase C - XBRL wider impact

Scope recently reaffirmed by customers, now discussing implications for:• compliance work (how IR make enquiries)

• IR/agents joint business processes

• incentives and customer benefits - to drive take-up

• Working with XBRL UK to demonstrate the business case for XBRL adoption across financial community

• Will use UK GAAP taxonomy for eFiled accounts

• Working with accounting software suppliers - integrate XBRL into their products?

Next Steps

Longer term - beyond Phase C?• Considering implications for small company reporting

• interaction with Company Law Reform• standard chart of accounts for very small companies?

• Even more radical joint process change?• Drill down to underlying data? Sharing risk rules?• Real time enquiries?• Shorter enquiry window?

• Single filing of accounts for all Government purposes?

Next Steps

Business Benefits based on CT eFiling using

XBRL

XBRL e-filing Business BenefitsImmediate & longer term

XBRL e-filing Business BenefitsImmediate & longer term

Wider use acrossGovernment

• IR is probably in the lead for UK Government Departments on XBRL development

• but work is co-ordinated by the Office of the eEnvoy

•have recommended XBRL for use by Government Departments

• Companies House the most obvious read across from accounts filing, but interest from:

• Office for National Statistics

• Financial Services Authority

• Customs & Excise

Wider use across Government

Approach to taxonomy development

Taxonomy development

The problem:

• Computation is essentially free-format with no standard content

•taxonomy must support total flexibility

•must not constrain the information that customers want to provide and the way in which they lay out the information

The solution:

• So far XBRL has met the requirements for flexibility without imposing constraints

Taxonomy development

• Started with a simple taxonomy derived from real examples of computations

• first draft had 350 lines (just using Excel)

• then transformed first in XML and later XBRL

• Workshops with customers to validate and to add layers of detail

• cycle repeated 8 times - now have 3,700 “lines”

• All output available (on Yahoo Group) for customers and software suppliers

• Taxonomy files, Linkbases, Stylesheets,

• “Tree” representation for easier review by humans!

Done by IR Inspectors

XML/XBRLspecialist skills required

Questions?

Jeff Smith

Service Development Leader

CT e-Services

Jeff.Smith@ir.gsi.gov.uk