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Enhanced Communication Between the Revenue & Taxpayers Thanks to New Filing System

7 Oct 2012

The Revenue is updating the Revenue Online Service (ROS) to accept financial statements in the format of inline eXtensible Business Reporting Language (iXBRL). iXBRL is a web-based computer language which allows financial statements to be presented in a format that is legible by both humans and computers.

This enhanced online filing service is scheduled to be available to corporate taxpayers from 23 November 2012 on a voluntary basis, with a phased mandatory introduction from October 2013 onwards. Taxand Ireland explores this new reporting system and its impact on taxpayers.

All companies registered for corporation tax will be given the option of uploading their financial statements either at the time of filing their returns or at a later date. From October 2013, the filing of financial statements in iXBRL format will be mandatory for companies dealt with by the Large Cases Division of Revenue. Thereafter the Revenue will introduce this process for all companies on a phased and progressive basis.

The Revenue recognises that many individuals, such as sole traders prepare financial statements for practical reasons. Those taxpayers therefore can file income tax returns together with their financial statements in iXBRL format via ROS from 1 January 2013 on an optional basis.

iXBRL uses unique identifying tags to identify items of financial data. These tags will provide a range of information about that particular item and will be able to show how items in the financial statements are related to one another and how those items may be grouped together. A compilation of these tags for Irish GAAP (Generally Accepted Accounting Principles) is not yet available. However, the Revenue Commissioners have proposed to accept GAAP accounts using the UK GAAP formats supplemented by an Irish extension, which will bridge any differences between Irish and UK GAAP.

Taxand's Take

From the taxpayers' perspective, this new system will alleviate the need for the duplication of data in financial statements and the tax return and therefore lead to greater accuracy, speed and convenience. Furthermore, taxpayers will be able to view and refer to financial statements and tax computations in the same manner as Revenue.

This new system will improve the filing process for compliant taxpayers, as it will allow the Revenue to focus their attention on analysing financial statements rather than sorting through data. This, in turn, will enable them to provide a much faster and focused response. It will also make way for the automatic identification of problems with returns that have been filed. It will lead to time and cost savings for compliant taxpayers as there will be less need to correspond with the Revenue regarding the content of financial statements.

To prepare for the introduction of this new addition to the filing requirement, companies should engage in the process prior to it becoming mandatory, in order to be fully prepared for its full introduction.

Your Taxand contact for further queries is:
Conor Bradbury
T. +353 1 6395 214

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Taxand's Take Author