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UK firms unprepared for iXBRL tax filing

UK accountancy firms are failing to address the wider implications of the move to iXBRL corporation tax filing, according to a study by tax and accounting information and software provider Commerce Clearing House (CCH).

The UK Revenue and Customs (HMRC) has ruled that electronic filing using iXBRL is required for any corporation tax submissions for financial years ending after 31 March 2011.

The CCH study questioned nearly 100 accountancy firms and identified a potential issue concerning practices that receive accounts from clients or third parties that may not be able submit tax information to HMRC in the correct format.

The research found 31% of accountants submit corporation tax returns for clients produced by third parties, with only 8% aware of how they will convert the results to iXBRL format before its HMRC submission.

Of the accountancy firms that receive external account submissions, 52% are in paper format and 48% in PDF, the least iXBRL friendly formats.

Further concern was expressed by 72% of those surveyed over the standard engagement letter not covering the issue of iXBRL compatibility, meaning accountancy firms could be held responsible for incorrect submissions.

CCH technical product manager David Routley said accountants should have engagement letters on file from when they originally started working with clients.

“With such significant changes just around the corner, it is crucial that these are reviewed so that they cover the possible implications of the new electronic system,” he said.

 

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