Small Companies (all 2 Million of them) will be required to electronically file their accounts with HMRC in something called in-line eXtended Business Reporting Language (iXBRL) This is a weird dialect of XML embedded in an html document – no other electronic from will be acceptable and – THERE WILL BE NO 'ON-PAPER' OPTION from April 2011.
The work involved in preparing every year's accounts filing will easily cost every small company over a thousand pounds. This regulation will cost UK small companies upwards of 2 Billion pounds. The do this in the present economic circumstances is absurd!
Why does this idea matter?
It will save 2 billion pounds from the overheads of small companies.
iXBRL is absurdly complex and the people who have designed it as an international standard did not, I think, ever envisage that it would be forced on the very smallest of one man companies without the alternative of on-paper filing (which is the case at present)
Several years ago the need to buy an Audit of these companies was abolished and this saved then thousands – now, rather conspiratorially, the accounting profession is looking to 'extort' even more money from these same small companies, the engine of growth in the economy.
There is another substantive problem with XBRL and that is data quality, even for medium and larger companies. Studies have show that where it has been tried the results in terms of data accuracy have been very poor. The basic problem is excessive complexity and the unreadability of the resulting files to check that the embedded tags are fully accurate. Even Microsoft committed howlers such as mixing up millions and billions.
If HMG thinks that the database created from these filings will be of any use then I suspect that they will find that the errors make it less than useful! This looks to be a huge waste of money and of an opportunity.