Why should you file in iXBRL format?
Section 133 of the Finance Act 2012 amended section 884 of the Taxes Consolidation Act 1997 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.
The progress in implementing iXBRL in Ireland
In July 2012, Revenue announced that from 23 November 2012 all companies would have the option to file iXBRL financial statements with Revenue. Later it mandated the submission of iXBRL financial statements for all companies dealt with by the Large Cases Division (“LCD”) of Revenue in respect of tax returns filed on or after 1 October 2013, relating to accounting periods ending on or after 31 December 2012.
Revenue has stated that for companies subject to mandatory iXBRL, filing tagged financial statements will now form part of the CT1 tax return. iXBRL financial statements are submitted as part of the CT1 tax return through Revenue Online Service (ROS).
Currently, in the case of a company, Financial Statements may be uploaded before, simultaneously with, or after the filing of the Form CT1. It is expected that the Financial Statements would be filed within 21 days of the filing of the CT1 or 21 days after the due date for the return, whichever is later.
Noncompliance could be extremely costly. Companies that fail to prepare their annual financial statements within the stipulated deadline can face penalty under section 917 EA (7).
Advantages of reporting in iXBRL format
Historically Revenue accepted the latest approved annual financial statements in PDF format via email or uploaded to their website and manually analysed them. This process was extremely slow and prone to errors. Effective from October 2013, Revenue has mandated that the Financial Statements be reported in iXBRL (inline eXtended Business Reporting Language) format which must accompany the Annual Tax Returns of a company. iXBRL will allow Revenue to obtain data that can be automatically entered into systems without the need to re-key, re-format or introduce other "translation" efforts.
The ease of doing business and particularly reducing the regulatory burden for businesses received a boost with the iXBRL reporting. Essentially, XBRL will lead to a dramatic reduction in costs by automating routine tasks; the quick and automatic identification of problems with filings; the analysis and comparing of data much more quickly, efficiently and reliably; and the monitoring of data and activities, allowing for judgements to be reached with far greater speed and confidence.
Advantages for the regulator
The iXBRL reporting system will allow the Revenue to determine industry trends and gain a high-level understanding of business in Ireland. By identifying various trends, Revenue will be able to pinpoint issues relating to the financial soundness of individual operations. Revenue will also be able to compare companies with companies and industries with industries over different periods.
Advantages for the user and consumer
The information gleaned via XBRL will be useful to private investment companies, giving them greater insight in where to invest. It could also help flag accounting irregularities and corporate fraud, potentially saving the country millions of euros and safeguarding jobs.