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The Financial Reporting Council's new taxonomies for iXBRL tagging became effective on 1 April 2015, with a phased introduction such that most companies will use them for the first time in 2016. HMRC's new rules for the iXBRL tagging of financial statements were prompted by the FRC's decision to replace UK GAAP. In this 2016 iXBRL update webcast, our specialists share practical insights about using the taxonomies to help those addressing the new challenge.
Jon Rowden, XBRL Assurance Leader, discusses the FRC's new taxonomies with Kashi Booluck, sharing practical insights about using the new iXBRL taxonomies to tag financial statements for company tax returns, as mandated by HMRC.
Jon: Hello, we’re here to discuss how iXBRL tagging for company tax returns has changed since the FRC’s new taxonomies came into force in April 2015. This has come about because UK GAAP, the basis for accounting that’s been around for a very long time, is departing. Now, new accounting standards are in force. The changes are significant and they create new challenges for you or whoever tags your financial statements. I am Jon Rowden and with me today is Kashi Booluck. Kashi, who’s affected by this change?
Kashi: Everyone is Jon. If they’re not using them yet, they will be soon. If you used the old UK GAAP to prepare your accounts then there is a mandatory move to a new accounting framework. With this new accounting framework you need to select the appropriate new taxonomy to tag your financial statements. If you are an IFRS user, then since 1 April 2015 you should have tagged your financial statements using the new IFRS taxonomy.
Jon: And what in a nutshell are the key changes?
Kashi: The taxonomies are bigger. We have additional areas such as the strategic report, directors’ report and auditors’ report to tag. There is no minimum tagging list anymore. We have full tagging, therefore all financial data and disclosures should be tagged wherever a tag is available and there are new complex tags.
Jon: Ok, some people’s hearts are going to sink with the word complex. Can you put some flesh on the bones of what we mean by complexity?
Kashi: HMRC has introduced something called “Analysis Items”. Take a Debtors’ note. Based on our review document which is called the blueprint, on your left-hand side you will see the Debtors’ note as it would appear on the financial statements, with highlights of where tagging has been done; on your right-hand side extra information is available for you to see which tags have been applied. Now, coming back to your question about analysis items, within the old UK GAAP you were only able to tag half of that information but with the analysis items it allows you to tag additional lines not previously catered for.
Jon: Ok, so there’s more tags to be applied and some thinking to be done. Can you give us another example?
Kashi: We have accounting policies; this is where analysis items kick in. You’ll have to create new tags to be able to tag all your accounting policies, however unusual they are. You have to keep going until you have full tagging.
The cash flow statement, if you look at the example, only the sub-totals at the bottom were being tagged but now every single item in the cash flow statement could be tagged using the full tagging.
Jon: So it used to be tagging for three lines, now it’s tagging for all eight in this example.
Jon: And how can PwC help?
Jon: I imagine a lot of people will be coming to these new taxonomies for the first time in the coming months. What are the tips, what are the questions that they should be asking?
Kashi: Well it depends who does the tagging. If you’re doing the tagging in-house then do you have the time and resources to go learn those new taxonomies? Does your software support those new taxonomies and how easy is the software to use?
Jon: And for those who outsource it to a managed tagging service provider?
Kashi: Well, you might think the software is somebody else’s problem, but it’s worth asking: Is your service provider ready? How will you review those new tags? And is my file tested on HMRC’s Gateway?
Jon: And what about PwC’s services?
Kashi: Our managed tagging service has used those FRC taxonomies and tagged many financial statements already. We test our file on HMRC’s Gateway and we’re happy to answer any questions. And as you have seen on the examples our review document is quite user friendly. We also provide a handover service for those who think they want to do the tagging in-house, but just want help for the first year.
Jon: So just to transition people across and get them going on the new taxonomy?
Jon: Thanks, Kashi. The new taxonomies have been in place for about a year. We’ve learnt a lot and in this webcast we’ve tried to share some of our learnings with you. If there are any questions though, please do reach out to us. You’ll find our contact details on our website. Thank you for watching and goodbye for now.