New FRS Taxonomies Call Time On Minimum Tagging

Where we have come from 2011 – 2014

Since the introduction of HM Revenue & Customs computer-readable ‘Extensible Business Reporting Language’ or iXBRL mandate in April 2011, minimum tagging has been the subject of considerable concern and debate. Minimum tagging is essentially the ability to tag using only a small subset of a full taxonomy.

Under UK GAAP and minimum tagging, it has been possible to tag using only a relatively small subset of the full taxonomy and this has allowed a properly tagged document to be accepted at the Government Gateway.

The expectation was that when the HM Revenue & Customs’ so-called ‘soft landing’ period came to an end two years later in early 2013, they would remove their published minimum tagging list. This would essentially mean that filers would then have to use full tagging of the accounts that accompany the CT600 form and computations to be accepted at the Government Gateway.

No doubt most filers were relatively comfortable with minimum tagging and hoped that the regime would continue indefinitely but the reality is that this desire was not shared by HM Revenue & Customs. They had made this fairly clear two years ago when guidance was issued in May 2013 advising early adopters of the new standards to tag their accounts with the existing International Financial Reporting Standards taxonomy until such time as a new taxonomy was available.

Signs that this rather pleasant period of stasis for filers was starting to unwind were noticeable towards the end of 2014. In September 2014, the FRC published a new XBRL taxonomy which supported tagging under the new standards and also under EU-adopted IFRS.

HM Revenue & Customs then updated its systems in December 2014 and shortly afterwards, stated that,

“XBRL has now been in place for a number of years and with the arrival of easier to use taxonomies, further development of software packages, and new consumers of XBRL, limited tagging is no longer desirable.”

Where are we now: 2015

UK GAAP has been superseded by the new FRS 101 and 102 accounting standards for periods beginning on or after 1 January 2015 and HM Revenue & Customs has used this change as the catalyst to finally remove minimum tagging.

The new accounting standards bring entirely new iXBRL taxonomies with them and these do not include a provision for minimum tagging.

Again, in the words of HM Revenue & Customs,

“HMRC … is now able to accept Company Tax returns containing accounts that have been tagged with the new taxonomy. HMRC is therefore mandating the use of the new taxonomy.”

The Implications

The FRS 101 & 102 taxonomies must now be used by all but the smallest companies for accounts issued for reporting periods beginning on or after 1st January 2015. Smaller companies, loosely defined as those with a turnover of less than £6.5million, will continue to use the Financial Reporting Standard for Smaller Entities or FRSSE.

While the FRS taxonomies will have to be used by all companies that previously fell under UK GAAP, it is likely that the new taxonomies will ultimately replace the FRSSE too, perhaps as early as January 2016, but certainly in the foreseeable future. If the new taxonomies are the preferred choice for HM Revenue & Customs, then it is not unreasonable to assume that these same taxonomies will come to dominate all submissions in the long run.

FRS 101 and 102 are semantically different from UK GAAP and therefore conventional remapping from one taxonomy to the other is not possible.

Finally, full tagging will bring with it greater certainty. For HM Revenue & Customs, that certainty will allow it to compare companies against industry benchmarks to focus its risk-based investigation efforts. For the filer, the greater certainty which comes with full tagging should operate to reduce the chance or error and the risk of HM Revenue & Customs raising unnecessary queries.

DataTracks provides a ‘managed tagging service’. Rather than filers having to buy software and tag accounts themselves, DataTracks offer a ‘tagging service’ whereby they take the clients’ non-iXBRL accounts, apply the appropriate XBRL tag to each data item and then provide their client with an iXBRL version of accounts that can be incorporated into a corporation tax return for submission. DataTracks has full FRS 101 and 102 iXBRL capability and its managed tagging service enables companies prepare and submit their iXBRL files with accuracy using the new taxonomies.

About DataTracks: DTracks Limited is a subsidiary of DataTracks Services Limited. With a track record of more than 10 years, DataTracks is a global leader in preparation of financial statements in XBRL and iXBRL formats for filing with regulators. DataTracks prepares more than 12,000 XBRL statements annually for filing with regulators such as SEC in the United States, HMRC in the United Kingdom, Revenue in Ireland, ACRA in Singapore and MCA in India.

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