Submission of Financial Statements in iXBRL

1. Introduction

Revenue is currently developing enhancements to ROS to accept financial statements in iXBRL format. This is scheduled to go live on 23 November 2012. From that date all Corporation Tax payers will have the option of uploading their financial statements either as part of their CT1 return filing or at a separate time. Initially the filing of financial statements in iXBRL will be on a purely optional basis but this will become mandatory over time, beginning in October 2013 with taxpayers dealt with in the Large Cases Division.

Taxpayers and practitioners are strongly advised to consider taking advantage of the optional filing period to ensure that they will be fully prepared when iXBRL filing becomes mandatory.

2. What is iXBRL?

2.1 XBRL

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. XBRL is being increasingly adopted by both businesses and regulators world-wide.

2.2 iXBRL

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. Generally, vendors of accounting software are now including iXBRL tagging functionality in their products allowing the iXBRL version of a set of financial statements to be generated automatically. What this means in practice is that the move to iXBRL will be relatively seamless for taxpayers and agents using standard accounting packages.

3. Taxonomies

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

Taxonomies are open-source documents published on the internet. There are taxonomies for most accounting standards worldwide including the various GAAP and IFRS standards. Published taxonomies may be supplemented with “Extensions” to meet specific needs.

Some tax administrations have published their own taxonomies to support the return of tax assessment data. Revenue is considering developing a taxonomy for Irish tax data at a later stage of the project but for now we are focussed on the submission of financial statements.

4. Choice of Taxonomy

While a taxonomy for Irish GAAP was published some years ago it has neither been maintained or tested by usage. By comparison, the UK GAAP and IFRS taxonomies have been used to file over 1.5 million sets of accounts. In order to ensure that Irish taxpayers and agents are using a robust reliable product we have opted to accept Irish GAAP accounts tagged according to the UK GAAP taxonomy supplemented by an “Irish extension” which bridges the differences between UK and Irish GAAP. The “Irish extension” taxonomy was published by XBRL Ireland in June 2012 and can be viewed or downloaded at http://www.xbrl-ie.net/. It is now being incorporated into standard accounting software packages available on the Irish market.

We will also accept IFRS accounts tagged according to the UK IFRS taxonomy. An Irish extension to UK IFRS is in development.

5. Legislative Change

S.133 of the Finance Act 2012 amended S.884 Taxes Consolidation Act to extend the definition of a return to encompass financial statements required to be prepared under the Companies Act. 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.

6. The iXBRL Submission Process

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

Financial statements may be uploaded either before, after, or simultaneously with the filing of a CT1. In the longer term we intend to link the submission of the return and financial statements in line with the amended S.884 TCA. However, we recognise that taxpayers and agents may experience some difficulties during the transition to iXBRL. Allowing separate filing of CT1 and associated financial statements ensures that any transitional difficulties will not disrupt the CT1 filing process.

6.1. Validation

Uploaded iXBRL financial statements will be subject to validation. Initially, the validation will be restricted to a limited number of fields such as period start and end date and the current mandatory accounts menu fields. If any submissions fail the validation process, a notification will be sent to the customer’s ROS inbox informing them of the errors. Customers will then have the option to amend and re-submit their accounts.

7. Mandatory iXBRL Filing

As with the initial move to on-line filing via ROS, Revenue will progressively mandate the submission of financial statements in iXBRL for Corporate Taxpayers beginning with cases dealt with in the Large Case Division (LCD). LCD cases filing Corporation Tax Returns on or after 1 October 2013 in respect of Accounting Periods ending on or after 31 December 2012 will be required to submit their financial statements in iXBRL format via ROS.

Revenue will review progress on the optional filing phase in consultation with taxpayer representative bodies during 2013 and following from this review we will determine the timing for mandatory iXBRL filing for all other Corporation Tax payers.

8. Accounts Menus

Taxpayers and agents filing financial statements in iXBRL will no longer have to complete the accounts menus pages of the CT1.

9. Income Tax

While there is no general statutory obligation for sole traders to prepare financial statements on the basis of a recognised accounting standard, Revenue recognises that many Income Tax taxpayers do so for practical reasons. In order to facilitate this body of taxpayers and their agents, we will provide the opportunity, from 1 January 2013, for taxpayers filing Income Tax returns to submit their financial statements in iXBRL format via ROS. Taxpayers choosing this option may omit the current accounts menu data required as part of their return.

10. Stakeholder Consultation

This e-brief is part of an ongoing stakeholder consultation programme by Revenue aimed at ensuring that taxpayers and agents are aware of and prepared for the transition to iXBRL usage.

Other aspects include:

• A consultation document was issued in December 2011
• A sub-committee of Collection TALC was established in January 2012 to bring together tax practitioner interests and Revenue in preparing for the changeover.
• Revenue, in liaison with XBRL Ireland, will undertake a nationwide awareness and education campaign aimed at practitioners in September 2012.
• Revenue are hosting a software suppliers forum to ensure that suppliers of accounting software can develop their products to meet our requirements.
• Revenue is contacting business representative groups and other relevant stakeholders to ensure their awareness of the changes.

Revenue is committed to supporting taxpayers and practitioners as we make the transition to iXBRL.

If you require any further information please e-mail ixbrl@revenue.ie or telephone Martin Roche at (01) 6131800 or Pat Mulhall at (01) 6131850