All you need to know about XBRL tagging
iXBRL is a reporting language adopted by HMRC to prepare compliance reports that can be read by the computer and by humans. Compliance reports were printed and sent to the regulatory authority in the past. With the introduction of XBRL, reading, analyzing, and interpreting important business information is simplified.
It ensures that investors and other market players consume only accurate business information to make valuable investment decisions. It is now a standard among regulators as they intend to streamline the way of reporting the financial data of a company.
As businesses navigate the intricacies of financial reporting, XBRL (eXtensible Business Reporting Language) has emerged as a critical tool for standardizing and streamlining the process. XBRL enables companies to transform financial data into a structured format, facilitating easy analysis, comparison, and dissemination. However, understanding how to effectively perform XBRL tagging requires a deep dive into its components, including XBRL taxonomy and iXBRL examples. In this guide, we’ll explore the fundamentals of XBRL tagging and provide insights into its practical application.
Adopting a digital route for submitting a company’s financial reports and returns becomes much simpler with a clear understanding of the language. This article will help you understand what XBRL tagging is, how it works and how to work it.
Understanding XBRL is key to staying current in the domain of statutory reporting.
What to Tag in HMRC XBRL Tagging?
The HMRC requires tagging of annual accounts and submission in iXBRL format from all corporate tax (or CT600) return filers. HMRC had earlier published minimum tagging lists that acted as a reference point for anyone attempting to tag specific items of a report.
Before one starts tagging specific financial items, it is essential to identify which data within a set of accounts should be tagged and what does not require tagging. Graphs and diagrams depicting trends, comparisons between different sectors using their indices, and descriptive information that entails the scope of business and operations are all elements that need not be tagged. Chairman’s statement, financial review, and other textual reports are among the reports that need not be tagged.
- Accounts that are included in the Company Tax return are required to be in iXBRL format. The companies act mandates that any company incorporated under the act must send individual accounts that are prepared for their members, documenting the profit and loss accounts, the balance sheet, and additional notes, including the Director’s or Auditor’s report.
- If the items in the Director’s and Auditor’s reports fall within the taxonomy, those reports also need to be tagged. Each instance of data occurring within the accounts mentioned above and notes needs to be tagged even if it appears twice. But one needs to ensure that the items fall within the taxonomy. If they don’t, then the items can be left as plain text.
- Comparative figures within the accounts from the past need to be tagged as well.
- If a particular item doesn’t appear in your accounts, you do not need to tag them; you can ignore them.
How to do XBRL Tagging?
Your reports in Excel, Word or PDF are converted using software that embeds the XBRL tags in your document and then converts them into the iXBRL format for people to read and understand the reports. XBRL tagging is a crucial process in modern financial reporting, allowing companies to convert their financial data into a structured format that is easily consumable and comparable. Here’s a step-by-step guide on how to do XBRL tagging effectively:
Commercial software
The commercially available accounts production software and corporation tax computation software are designed to attach the XBRL tags automatically. The tagging process occurs when one enters the data into the software onto a predefined field.
Users must ensure that they understand the limitations of the software before using it, as they cannot risk missing an essential element that the software can’t tag automatically because of the ‘free format’ fields.
Understanding if the software meets all your needs is crucial before choosing it for your business. If you are using your in-house staff to tag the items, they need to be familiar with the software and trained to tag the accounts.
Tax Agent/Advisor
You will have to send your accounts to your agents as a Word, Excel or PDF document, and they will prepare your accounts in the usual way and tag the items using commercially available software.
Engaging a Managed Tagging Solution Provider
Outsourcing is the most error-free way of preparing your reports in the XBRL and iXBRL formats. The experts involved in the tagging process specialize in creating risk-free and compliant reports. DataTracks is one such organization that specializes in preparing compliance reports in XBRL and iXBRL formats as per the requirements listed by the regulatory authority.
If you’re looking to outsource your iXBRL tagging Services and reporting requirements, then DataTracks is the right place. The experts at DataTracks specialize in producing quality, error-free iXBRL services in a professional and time-sensitive manner. With over 19 years of domain experience, DataTracks will only help you better your reporting structure with faster, better, and more efficient methods.
Stay Informed and Updated
Stay informed about regulatory changes, updates to XBRL taxonomies, and best practices in XBRL tagging. Regularly monitor relevant industry publications, attend training sessions, and engage with XBRL communities to stay ahead of developments in the field.
Review and Refine
Conduct periodic reviews of your XBRL tagging processes to identify areas for improvement. Solicit feedback from stakeholders and external auditors to ensure that XBRL documents meet their needs and expectations. Continuously refine your XBRL tagging practices to optimize efficiency, accuracy, and compliance.
In summary, iXBRL tagging is a transformative approach in financial reporting, enabling businesses to accurately and efficiently prepare and submit their financial data . By adopting the right tools and strategies, such as using specialized services, collaborating with tax advisors, or outsourcing to expert service providers like DataTracks, companies can ensure compliance with HMRC requirements and enhance the accessibility of their financial reports. Staying informed about updates in iXBRL taxonomies and continuously refining the tagging process are crucial steps towards maintaining relevance and precision in financial reporting. Embracing iXBRL not only aligns with regulatory demands but also significantly benefits stakeholders by providing clear, comparable, and actionable financial information.
