Details

  • Service: Audit, Advisory, Tax
  • Type: Business and industry issue, KPMG information
  • Date: 08/07/2014

iXBRL & XME: Questions & Answers 

iXBRL & XME: Questions & Answers

Background

What is IXBRL?

XBRL is eXtensible Business Reporting Language.

 

This is a language that allows the presentation of financial information in a computer-readable format. This is achieved by tagging each piece of financial information with a label that identifies it in terms of standard accounting or tax concepts.

 

What is the difference between iXBRL and XBRL?

Standard XBRL is presented as a series of tags and numbers. iXBRL, or inline XBRL, is a more recent version of the language, which allows financial information to be presented in a format that is both human-readable and machine-readable. This is achieved by presenting the data (e.g. financial statements) in a normal document format but with XBRL “tags” embedded in the soft copy document.

 

What are tags?

Tagging involves the application of computer-readable ‘tags’ to business data. This enables the data to be processed and analysed automatically by software. For example ‘Tags’ allow items of data such as Gross Profit, Stock, Debtors, etc. to be identified for the production of management reports or financial statements.

 

What is a taxonomy?

iXBRL tags are interpreted by reference to “taxonomies”. A taxonomy is effectively an electronic dictionary, linking each tag with the concept it identifies. For example, in the Irish GAAP extension taxonomy, the tag ie-gaap:ROICorporationTaxPaid denotes Irish Corporation Tax paid.

 

What taxonomies will the Revenue Accept?

Revenue has stated that they will accept accounts prepared in accordance with the UK-GAAP and UK-IFRS taxonomies supplemented by “Irish extensions” which bridge the differences between UK and Irish GAAP/ IFRS.

 

Does iXBRL cause a change in accounting standards?

iXBRL does not change accounting standards. It is simply a language for transmitting information that accurately reflects data reported under GAAP and IFRS.

 

Do tax payers have to make a separate submission of Financial Statements in iXBRL format to the Companies Registration Office (CRO)?

No. The Companies Registration Office (CRO) process and obligations remain unchanged.

 

Is there / will there be any requirement to provide tagged annual reports on corporate websites?

Not at the moment. Although we do think in the future this may be likely.

 

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Who does iXBRL apply to?

Who is required to submit financial statements in iXBRL format and when?

Initially the filing of financial statements in iXBRL will be on a optional basis for Corporation Tax and Income Tax Payers but this will become mandatory over time.

 

Commencement Date Who
23 Nov 2012 Voluntary for all Corporation Tax payers
1 Jan 2013 Voluntary for all Income Tax payers
1 Oct 2013

Mandatory for customers of Revenue’s Large Cases Division (LCD) customers filing Corporation Tax returns except S.110 Securitisation Special Purpose Vehicles (SPVs):

 

  • (i) on or after 1 Oct 2013; and
  • (ii) with respect to Accounting Periods ending on or after 31 Dec 2012.

 

1 May 2014

Mandatory for customers of Revenue’s Large Cases Division S.110 Securitisation Special Purpose Vehicles (SPVs) customers filing Corporation Tax returns:

 

  • (i) on or after 1 May 2014; and
  • (ii) with respect to Accounting Periods ending on or after 31 July 2013.

 

1 Oct 2014

Mandatory for all non-LCD Revenue customers filing Corporation Tax returns, except those meeting iXBRL exemption criteria:

 

  • (i) on or after 1 Oct 2014; and
  • (ii) with respect to Accounting Periods ending on or after 31 Dec 2013.

 

iXBRL exemption criteria To be excluded, a company must meet all three of the following criteria viz:-

 

  • (i) The balance sheet value of the company does not exceed €4.4 million;
  • (ii) The amount of the turnover of the company does not exceed €8.8 million; and
  • (iii) The average number of persons employed by the company does not exceed 50.

 

2015 It is intended that all remaining Corporation Tax Payers will be included in the next phase which will commence in 2015. Further details will be announced in early 2014.

 

If taxpayers file Financial Statements in iXBRL format during the optional phase, will they be subject to any additional Revenue scrutiny?

No. Taxpayers will not be disadvantaged. There will be no risk analysis based on iXBRL Financial Statements prior to mandation. The voluntary phase affords entities an opportunity to test their readiness for iXBRL filing prior to mandation.

 

Why are entities required to submit Financial Statements in iXBRL format?

Section 133 of the Finance Act, 2012 amended Section 884 of the Taxes Consolidation Act (TCA) to extend the definition of a return to encompass Financial Statements, which are prepared or made out in accordance with the Companies Act 1963. Therefore, all companies required under the Companies Act 1963 to prepare Financial Statements must return these to the Revenue for the relevant Accounting Period. This, coupled with the existing e-filing legislation, establishes a statutory basis for the mandatory submission of iXBRL financial statements as part of the tax return.

 

Is it sufficient to submit financial statements in PDF format?

PDF files are not an acceptable means of filing financial statements, as they do not contain iXBRL tags.

 

Do audit exempt companies have to file Financial Statements in iXBRL format?

 

If the audit exempt company is registered for Irish Corporation Tax and is required to prepare Financial Statements in accordance with the Companies Act 1963, those Financial Statements must be submitted in iXBRL format.

 

It is irrelevant to the requirement to file accounts in iXBRL format as to whether those accounts are audited or not.

 

Do small companies need to file under iXBRL?

If the small company is registered for Irish Corporation Tax and is required to prepare Financial Statements in accordance with the Companies Act 1963, those Financial Statements must be submitted in iXBRL format.

 

Will Dormant (inactive) companies have to file Financial Statements in iXBRL format?

Companies that are inactive may approach their tax district to seek permission not to file returns for the relevant periods of dormancy. In such circumstances, Revenue are willing to exempt a company from the obligation to file financial statements in iXBRL format. Revenue classify a company as inactive, and hence exempt from their filing obligation, where there is no activity in the accounting period and define no activity in an accounting period as being where there is:

 

  • No income or expenses on the Profit and Loss account (annual CRO and audit fees can be ignored); and
  • A balance sheet movement of less than EUR500 (except in the first year after the company becomes inactive where an inactive company is paying off their trade creditors, and have not been previously obliged to file accounts in iXBRL format).

 

Revenue note that a company that does not meet the above conditions may still request an exemption from filing their accounts from their tax district if they consider their circumstances warrant such an exemption.

 

Are (i) Irish branches of foreign companies and (ii) companies that are not resident but are trading through a Branch or Agency in Ireland, required to submit Financial Statements in iXBRL format?

Yes. S.884(2B) of the Taxes Consolidation Act (TCA,) as inserted by S.95(c) of the Finance Act, 2013, extended the definition of a return in respect of a company trading through a Branch or Agency to encompass accounts, containing sufficient information to enable the chargeable profits of that company’s trade to be determined. Section 76 TCA requires such financial statements to conform to GAAP or IFRS. In practice Revenue will require an iXBRL Profit and Loss account in respect of all companies trading through a branch or agency and a balance sheet to the extent that one is prepared in respect of the branch or agency.

 

Are Companies in liquidation required to prepare and file Financial Statements in iXBRL format for the pre-liquidation period?

If the company in liquidation is registered for Irish Corporation Tax and is required to prepare Financial Statements in accordance with the Companies Act 1963, those Financial Statements must be submitted in iXBRL format. However, for individual liquidation cases, it is advisable that the companies should contact the Debt Management and Insolvency Section, in the Office of the Collector-General.

 

Is it permissible to submit abridged Financial Statements iXBRL format?

No. Abridged accounts will not constitute a valid submission.

 

Can I submit Financial Statements in iXBRL format in the Irish language?

Yes. The filing of Financial Statements in iXBRL format will be facilitated through Revenue’s On-Line Service (ROS) which may be accessed/operated through Irish or English. However, it should be noted that the taxonomies which Revenue will accept have been developed in English.

 

Where consolidated accounts are prepared in respect of a Parent Company, does a separate set of Financial Statements need to be submitted in respect of individual companies within the Group?

Yes. Where there is a requirement under the Companies Act, 1963 to prepare or make out a set of Financial Statements in respect of each entity, so should such statements be returned to Revenue for the relevant Accounting Period (assuming that the individual company is registered for Irish Corporation Tax and is dealt with by the Large Cases Division).

 

Where consolidated accounts are prepared for a group of companies, can these financial statements be submitted in iXBRL format to Revenue?

No. Consolidated financial statements should not be submitted to Revenue in iXBRL format in respect of a group holding company. Consolidated financial statements are prepared for an accounting period to represent the activity of a group of companies. However companies within such a group, including the group holding company, are usually individually registered for Corporation Tax and are required to file a tax return to Revenue based on accounts prepared and made out in respect of that company’s individual activity. It is these individual sets of accounts which Revenue require to be submitted in iXBRL format in respect of each company within a group.

 

With regard to the group holding company, it is likely that the information to be tagged will be a trial balance or management accounts (whatever is used as the basis for the submission of the return).

 

However, in the case of some un-incorporated entities established by the Government, financial statement requirements are prescribed in their enacting legislation rather than the Companies Act. In such circumstances, in the context of Revenue’s commitment in introducing iXBRL filing not to impose an additional accounts preparation burden, the financial statements currently prepared in respect of the parent company will be deemed to satisfy iXBRL filing obligations where they are submitted in iXBRL format in the manner and time prescribed.

 

If we have a foreign parent, do we need to tag the consolidated accounts as well, or are we fine with just tagging our Irish subsidies?

Only the Irish subsidiaries, who file Irish tax returns, and who are required to prepare financial statements, and who are dealt with by the Large Cases Division will be required to submit their accounts in iXBRL. You can still submit the foreign accounts in PDF as supplementary information.

 

Will an Irish subsidiary of a UK group company also be required to follow iXBRL?

Yes. iXBRL applies to all entities submitting CT 1 returns to the Revenue.

 

Does the mandatory filling of accounts in iXBRL also apply to UK based entities?

Yes. iXBRL filing of statutory accounts has been mandatory in the UK since April 2011.

 

Will LLP’s returns need to be tagged in future years?

The Revenue have made no mention of this requirement to date.

 

Do we have to tag interims?

No.

 

Are there any special tagging requirements for banks or financial services firms?

Not at present.

 

What happens when we switch from Irish GAAP to IFRS as a basis? Is it complete re-tagging?

If the Revenue supply a mapping between Irish GAAP and IFRS then we will update our tool. However, as it currently stands, you would need to re-tag.

 

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Tax return issues

If a tax payer/ agent files financial statements in iXBRL format, do they still have to complete the Revenue On-line Service (ROS) accounts extract menu?

No. Taxpayers and agents filing financial statements in iXBRL will no longer have to complete the accounts menus pages on the ROS returns.

 

Do tax payers still have to file a Corporation Tax return (CT1) or Income Tax return (Form 11)?

Yes. The forms CT1 and Form 11 must continue to be submitted.

 

Are tax payers required to submit Tax Computations in iXBRL format?

Presently, Tax Computations cannot be submitted in iXBRL format.

 

What is the process for submitting financial statements via iXBRL?

An update to ROS scheduled for release on 23 November 2012 will include new screens allowing taxpayers or agents to submit their accounts in iXBRL. This will be accessible at any time via the “My Services” screen in ROS and will also be available during the CT1 filing process.

 

Financial statements may be uploaded before, after, or simultaneously with the filing of a CT1.

 

How will tax payers know that their iXBRL filing has been accepted by the Revenue?

A message confirming a successful filing will be returned. If a filing is unsuccessful, a message will be displayed to indicate the nature of the problem.

 

Will the Revenue make a test facility available for iXBRL filers?

A test facility will be made available to allow customers to ensure that their iXBRL files are working satisfactorily in advance of submission.

 

Do tax payers have to file Financial Statements at the same time as their CT1 or Form 11?

Financial Statements may be uploaded before, simultaneously with or after the filing of a CT1 or Form 11. However, the Revenue expect that the Financial Statements would be filed within one week of the filing of the CT1 or Form 11 or after the due date for the return, whatever is the later.

 

Can tax payers submit revised financial statements if an error is identified (perhaps due to a tagging mistake)?

Yes. It is possible to submit a corrective version of financial statements.

 

Do draft financial statements have to be tagged?

In case of exceptional circumstances where a Revenue Case Manager sanctions an interim filing of provisional/draft financial statements, the provisional financial statements submitted must be in iXBRL format. When the final signed-off set of financial statements are subsequently submitted, they must also be in iXBRL format.

 

Where amended Financial Statements are submitted, is there a requirement to re-submit the CT1 or Form 11?

Where the adjustments to the Financial Statements do not also impact the information submitted in the CT1/Form 11, there is no requirement to re-submit the CT1 or Form 11.

 

Will there be a penalty for not filing correct iXBRL accounts?

For cases subject to mandatory iXBRL, filing the tagged financial statements will now form part of the tax return. However, recognising that the move to iXBRL will be a significant change for some taxpayers, Revenue will not impose late filing surcharges or other penalties in respect of errors in the creation or filing of iXBRL tagged financial statements for a period of 2 years following mandation where a taxpayer has made reasonable efforts to comply with their obligations. This concession relates to iXBRL filing difficulties only and does not in any way constitute a change to the normal surcharge and penalty regime.

 

What should I do if I need to adjust my ROS accounting period and /or my financial statements cover more than a single ROS Period?

Similar to CT1s, iXBRL financial statements must be submitted in respect of ROS accounting periods. In the course of the submission process, ROS checks that the iXBRL financial statements cover the selected ROS period. This check ensures that the accounts start date is not later than the start date of the ROS period to which they are being attached and that the accounts end date is not earlier than the end date of the ROS period (subject to slight variances to take cognisance of weekends etc).

 

In some circumstances, such as company mergers for example, ROS periods may need to be adjusted and customers may request such adjustments through their tax district. When the revised ROS period(s) are set-up, the iXBRL financial statements may then be submitted in respect of the period(s).

 

Where, as a consequence of ROS accounting period adjustments, an iXBRL financial statement covers more than one ROS period, it may be submitted in respect of each of these periods.

 

Note: Where a ROS accounting period is adjusted, iXBRL filings previously submitted in respect of such period(s) will no longer be valid and consequently iXBRL financial statements must be re-submitted for adjusted period(s).

 

Should S.110 companies that elect to re-cast their accounts to a differing accounting standard for a given accounting period submit the revised accounts with their filing?

S.110 companies who elect to re-cast their IFRS accounts to Irish GAAP as applied at December 2004 in line with S.110 (6) TCA 1997 may submit their iXBRL financial statements tagged in accordance with either the original or re-cast accounting standard. However all parts of the Financial Statements filed must conform to a single accounting standard and be tagged accordingly.

 

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Tagging issues

In the UK, HMRC provide a tagging facility for small entities. Will the Revenue be providing a similar facility?

The Revenue have stated that there are currently no plans to provide such a facility.

 

What is the name of KPMG’s iXBRL tagging conversion software?

XME.

 

Who owns the XME conversion software?

The XME conversion software is owned and supported by KPMG.

 

Our accounts are in €000’s but the tax computations are in €’s. Is this permitted to continue?

Yes. The technology permits different reporting scales and will allow you to decide how to round numbers.

 

Which currencies does XME support?

All world currencies are supported by XME.

 

Can iXBRL services be provided to audit clients?

Yes. Auditing Practice Board (APB) Bulletin 2010/1, ISAs (UK and Ireland) specifically permits the provision of such services.

 

What items within the financial statements need to be tagged?

Revenue has mandated the “full tagging” of financial statements including the Directors Report, Auditors Report, Profit & Loss account, Balance Sheet, Notes to the accounts, Cash Flow statements and Statement of Total Recognised Gains & Losses (this list is not exhaustive). Notes on Pensions and Financial Instruments do not have to be tagged.

 

With the exception of the aforementioned exclusions, all data items presented must be tagged including comparative period figures. If a data item appears more than once then it must be tagged each time. In circumstances where a financial report data item or concept does not have a matching (GAAP or IFRS) taxonomy tag, the data concerned should simply be left as plain text.

 

As a guide, Revenue expect the data to be tagged in respect of the Director’s Report to include: Description of principal activities of the company, List of Directors and Secretary, Purchase of own shares, Directors remuneration, Directors acknowledging their responsibilities under the Companies Act and the Directors signing the report and date of signing.

 

Similarly the Name of Auditor(s), Emphasis of matter statement, Statement on reasons for any qualification of opinion and Date of Auditor’s Report are expected to be tagged in respect of the Auditors Report.

 

In contrast to Revenue’s full tagging approach, it should be noted that UK Corporation Tax filers are only required to ‘tag’ a number of specific data items on the Financial Statements (as outlined on the HMRC Minimum Tag List).

 

Do you need to tag all the figures, or will some figures be worked out by iXBRL?

All figures on the face of your accounts need to be tagged including calculated numbers.

 

Once tagged, can we re-use the following year if the file name changes in MS Excel?

Yes.

 

Does XME work on PDF accounts?

No. You need to work from accounts prepared in either MS Word or Excel.

 

Does XME work where the accounts are prepared in a Word document which includes Excel tables for the majority of the P&L, balance sheet and notes?

Yes. Although it depends on how you are doing this. If you link MS Excel to Word, then it works fine. However, if you have embedded an Excel object then this will cause issues.

 

Do the original Word documents have to be in table format to enable successful tagging of figures?

No. They can be free format (but tables are preferable).

 

Does XME retain information from the previous year?

All the tagging information is retained from the prior year, so the incremental process in year 2 should be reduced significantly.

 

Does the green validation highlighting on the XME tagging print out in the final submission document?

No. XME automatically removes this highlighting when the final submission document is generated.

 

Do we need to tag prior year comparative values?

Yes. Both current and comparative figures must be tagged in all submissions, however as long as the accounts are rolled forward correctly the tags will remain from the prior year so no re-tagging of the prior year numbers will be required.

 

How does the tagging of the text sections of the accounts work? Do your words have to be identical to what is in the taxonomy?

You simply tell the tool that this section of text = this tag; the words in your accounts and the naming of the tags as they appear in the taxonomy do not have to be identical.

 

What matters is that the accounting concept is correct for the chosen tagged item.

 

If you do not tag everything that is required will ROS reject the final submission?

ROS will only check to make sure that eight Business-Mandatory tags are included in the accounts and that all other tags are technically correct. The omission of non Business-Mandatory tags from the accounts will not cause a submission failure. However the accounts may not be considered as best effort compliant by the Revenue.

 

Does the XME software perform validation between the tax computations and statutory accounts, i.e. checking depreciation in both are the same?

No. XME does not interact with your computations at any point.

 

How do you know the tags are properly done? Does the system identify what has been tagged? If so, do you know if it is correct?

The XME tool has multiple review features to allow you to spot inaccuracies which include:

 

  1. An internal tagging check functionality which replicates ROS tag tests. Tags which are technically incorrect (for example, where a monetary tag includes alpha-numeric characters which would cause it to fail the submission tests by ROS) then XME will highlight this error as red
  2. A test to make sure that all Business Mandatory tags are tagged prior to submission
  3. Report highlighting which helps to ensure that scale, currency, context and negation choices are correctly made.
  4. A range of other tagging review reports.

 

Does the software remember tags and can it replicate them across several statutory accounts, or does each one need to be individually tagged?

You can create standard templates for multiple legal entities. You can then pre-tag the standard template and have multiple legal entities base their accounts on one document. XME also allows you to copy ranges of tagged cells and paste them in other locations in the same tagged accounts.

 

Typically, how long should it take to tag a ‘standard’ set of accounts?

For a set of individual, non-complex, accounts in Irish GAAP, it takes an experienced user a working day to fully tag and review those accounts.

 

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Contact our iXBRL team

jon d'arcy

Jon D'Arcy

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Partner
ixbrl@kpmg.ie
01 4102236

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 dominic mudge

Dominic Mudge
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ixbrl@kpmg.ie

+44 28 9089 3790

 

Leigh Harrison 

Leigh Harrison

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ixbrl@kpmg.ie

+44 28 9089 3748

 

Nina Ramsey

Nina Ramsey

Associate Director

ixbrl@kpmg.ie

+44 28 9089 3805

 

Paul Braden
Paul Braden

Assistant Manager

ixbrl@kpmg.ie

+44 28 9089 3807

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iXBRL - Tagging financial documents for Revenue tax compliance

Towards the end of 2012, the Revenue announced its plans to introduce iXBRL into the Irish tax compliance process. 

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