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Will HMRC’s XBRL forced march be a stealth tax?

by Dennis Howlett on October 12, 2009

Jon Stow asserts that the introduction of XBRL for filing purposes amounts to a form of stealth tax:

The effect of the new requirement for XBRL format is to transfer further costs to taxpayers. The increase in software costs for tax agents will either have to be passed on to clients or the agents will have to bear them. No doubt the specialist tax software providers will have their developers working furiously to be ready for 2011 and they will need to charge the end user. Unfortunately the change will amount to a stealth tax

This is very much a case of a regulatory update. There should be no charge for the update under the supplier’s maintenance agreement. If the software supplier decides to charge then make sure you’ve read the terms very carefully and are in a position to negotiate.

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  • susannah75
    Have a look at this XBRL networking site - we are trying to get a lot of discussion going from as many users as possible to get a really good rounded view of XBRL with the up and coming requirement from HMRC.
    http://ccd.investormatrix.com/XBRL
    The site has posts from in house XBRL experts and enthusiasts. Please take a minute to visit the site.
  • The idea that the provision of XBRL to HMRC will be a "stealth tax" through passing of costs to business is not correct. I want to use harsher language, but this is a family site (figuratively speaking).

    The Netherlands government embarked on their National Taxonomy Project with the specific objective of streamlining business reporting. The project was initially projected to return Euros 350 million in benefit to Dutch business through process efficiencies. Certainly, the Netherlands project has failed to deliver, but that real problem with the Netherlands project is that it remains voluntary, not mandatory.

    A review of the project benefits resulted, as so often does, in a revision of the estimated benefit. In this case however, the revision has been to increase the projected benefit to Euros 1 billion annually, from the Euros 350 million.

    What does this mean for the UK? Simply that the effective implementation of XBRL for HMRC reporting opens the door to process improvements by accountants, and the potential for improvements in reporting processes to other government agencies, both national and local, ultimately reducing the administrative and compliance burden on businesses. Software providers will incorporate XBRL into their processes, certainly as output options. Additional taxonomies will be developed, or existing taxonomies will be extended to cover a wider range of reporting elements for various consumers, and ultimately business will find it easier to produce the information required.

    Those that speak of an increased burden are looking at the short term only.

    These are the same people who would have opposed the introduction of computing to accounting, as it would have increased complexity and cost. After all, people are cheaper, and we already know how to produce large paper based volumes on A3 width journals. Computers will cost us too much, and it will take years to see any tangible benefit.

    Lets look at this another way - XBRL is to business reporting what the Internet is to the paper-based Yellow Pages. Information streamlined, current, available to those that need it, and accurate. The investment today will reap process efficiencies and benefits beyond what we can see from the current project(s).
  • Agreed. It won't be an extra, it'll be a compliance requirement. Don't expect to have to pay for an extra 'module' and tell any supplier who tries it to get knotted!

    Extra reporting tools, or custom formats are reasonable extras, but not statutory requirements.
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