What exactly is UKSEF uk sef - What exactly is UK SEF?

What exactly is UK SEF?

The Financial Reporting Council (FRC) released the UK Single Electronic Format (UK SEF) taxonomy in September 2020 as part of its 2021 suite of taxonomies. In its communication back then, the FRC said companies could use the UK SEF taxonomy for their filings with the Companies House and the HMRC.

In this short write-up, we discuss the similarities between the UK SEF taxonomy and the European Single Electronic Format (ESEF) taxonomy. We will also answer the question if UK companies can use the UK SEF taxonomy instead of the ESEF taxonomy for their reporting with the Financial Conduct Authority (FCA).

We’d further like to remind our readers that the UK opted for a revised timeline for implementing the ESEF mandate, to lessen the financial burden on companies due to the coronavirus pandemic.

UK SEF: A brief intro

In a PwC blog, iXBRL expert Jon Rowden writes that UK SEF is a taxonomy that builds upon or extends to the ESEF taxonomy. UK SEF adds the component of carbon emissions disclosures to the ESEF taxonomy through the Streamlined Energy and Carbon Reporting (SECR) requirement. It also makes room for a mention of the company’s registered number and period end date — a requirement for filing with the Companies House.

Simply put, UK SEF = ESEF + SECR + Company’s registered number and period end date.

It may also help to recall that the SECR taxonomy was released in early 2020, having been developed jointly by the Financial Reporting Council (FRC), Companies House, and the Department of Business, Energy, and Industrial Strategy (BEIS).

Can companies use UK SEF instead of ESEF?

The UK’s Department for Business, Energy, and Industrial Strategy (BEIS) has said that companies could use UK SEF to file their annual reports with the FCA.

However, companies might be hesitant take on the additional burden of Streamlined Energy and Carbon Reporting (SECR) that comes with UK SEF. They may prefer using the ESEF taxonomy for their FCA reporting.

Expert view on the SECR requirement

Jon Rowden, who we’ve mentioned above, writes that since stakeholders will have access to information in a digital format under ESEF, it seems reasonable for companies to extend that information to cover SECR disclosures. That would also allow them to file the fullest version of their annual report with the Companies House.

However, since ESEF is an annual commitment and filing for the first time in that format may be a challenge, “the UK SEF step-up could be rolled into the additional tagging necessary for second year compliance with ESEF”.

As another option, UK SEF can be deferred to until it becomes mandatory, says Jon. He adds, however, that there is no certainty that UK SEF will be made mandatory.

Jon says he hopes that some companies decide that compliance with the additional SECR requirement is a step worth taking. “…the SECR data is of considerable interest and the more data that can be filed at Companies House, the better.”

Fin-X Solutions® is your one-stop solution for all iXBRL requirements in the UK and Ireland. We let you choose your compliance model. Prepare your ESEF (or UK SEF) documents in-house, outsource the report creation to us, or opt for a blend of the two options.

UKSEF, ESEF, UKSEF taxonomy, ESEF taxonomy

UKSEF, ESEF, UKSEF taxonomy, ESEF taxonomy

UKSEF, ESEF, UKSEF taxonomy, ESEF taxonomy


esef reporting - ESEF reporting: Lessons to learn from early filing experiences

ESEF reporting: Lessons to learn from early filing experiences

ESEF Reporting

Under ESMA’s ESEF reporting directive for European listed entities, it became obligatory to file Annual Financial Reports in the iXBRL format for the financial year ending 2020. While the rise of the pandemic resulted in most European member states opting for a one-year deferral on the mandate,  several issuers decided to go against the grain and created their electronic filings anyway.

In this article, we outline some first-hand experiences of these early adopters of ESEF reporting. We hope companies in the UK would benefit from these experiences and go on to make glitch-free ESEF submissions to the FCA for financial year 2021.

“Where do we start?”

You may be a lighthouse customer who has already filed their first ESEF report, or a non-participant who has decided to wait and watch; there’s a good chance you’ve already posed this question to your finance team at some point. Deciding how to proceed FCA-ESEF compliance finally comes down to a choice between two alternatives – an inhouse or outsourced solution.

Choosing an inhouse solution requires personnel who are equipped with substantial accounting knowhow as well as proficiency in XBRL. You would also need a product or service for the subsequent xHTML conversion of your annual report.

The effort to bring this process inhouse is usually only observed in organisations looking to develop long-term inhouse XBRL competency. It entails detailed planning — in terms of the time and money that the organization needs to devote to training its resources.

As XBRL evangelists who have worked with the standard for more than 15 years and in over 40 countries, we have seen that while companies initially prefer to outsource their XBRL/iXBRL creation to a XBRL software/service provider, they only begin to move these processes in-house when they start gaining familiarity with them.

Picking the right FCA-ESEF reporting solution

There is a surplus of tools that aid with all the parts of ESEF reporting. What then, should you consider, when choosing the best tool for your ESEF reporting needs?

A product that can precisely tag numbers in your financial statements, as well as transform your stylized annual report into xHTML effortlessly and without loss in detail, is necessary.

If your chosen product can also align with narrative reporting, i.e. tagging notes, then that’s just the cherry on the cake. For you are then prepared for future revisions to the ESEF mandate and those related to broader phase 2 ESEF reporting.

Other elements that may affect your final decision with respect to the choice of product or service might include budgeting, report complexity, corporate governance, and testimonies of reference customers.

Knowing the taxonomy and tagging requirements

 ESEF filings

Taxonomies can be quite complicated and perplexing for first-time filers. If a concept doesn’t exist for a data item in your report, a custom tag or extension needs to be generated. These extensions should be used sparingly as they influence ESEF reporting by decreasing the comparability of your report against others.

In addition to choosing the right tools, it’s imperative to have the right experts by your side to assist you with regards to tagging, extensions and anchoring. Since these tools are not a 100% automated, they require human intervention every now and then.

 XBRL tagging is not as big a deal as xHTML conversion

There has been an extraordinary emphasis on getting XBRL tagging right. However, the time and effort involved in creating an xHTML file that is identical to a company’s stylized PDF annual report, is underrepresented.

After examining some of the early ESEF filings, we found that the biggest challenge issuers are facing is to have an xHTML file that is indistinguishable from its PDF counterpart. It is therefore important to pick a service provider and software that can accomplish this adequately. Carrying out a test run with an ESEF vendor can help you assess the results for yourself. As a good starting point, ask the vendor you are evaluating to convert a short section of your stylized report into xHTML.

Passing three levels of validations

There are three levels of validations that need passing to complete a successful ESEF filing. These are tool validations at the level of the ESEF service provider, the auditor and finally the local regulator (FCA in this instance).

Issuers may pass one level but fail another. Therefore, it is wise to do a dry run with an older annual report, (perhaps from the year prior) ahead of the live ESEF filing. It is imperative to make sure your ESEF iXBRL package passes all 3 levels of validations. The FCA will accept structured and tagged AFRs using non-reference taxonomies during the voluntary filing period.

 ESEF filings

The audit process and tackling last minute changes

In some countries, there are official recommendations for the audit of annual reports published in the ESEF iXBRL format. This means that every version of the annual report that is sent to an auditor needs to be audited for ESEF as well. Therefore, it is essential to make sure your annual report publication schedule is allied with that of your auditor’s, leaving some buffer for contingencies.

Last second alterations brought about by the auditors and the Board can result in an increased to and fro, and more pressure to file on time. The design agency needs to track and incorporate these last-minute changes. The ESEF vendor also needs to deliver an updated ESEF reporting package on time, which will then be signed off by the auditor.

Crafting a calendar where all participants, both in the organization and outside of it (design agency, ESEF vendor, auditor) are in sync, is fundamental to the success of your ESEF filing. Dry runs and testimonies from your vendor’s reference customers are indispensable in tackling the issues.

The key to successful ESEF reporting lies as much in attentiveness as it does in time management. Though submissions may seem convoluted at first, with the right set of utilities and personal guidance, your ESEF filing can be completed with minimal effort.

ESEF Reporting, ESEF Filing, ESEF, XBRL, iXBRL, xHTML

ESEF Reporting, ESEF Filing, ESEF, XBRL, iXBRL, xHTML

ESEF Reporting, ESEF Filing, ESEF, XBRL, iXBRL, xHTML


esef software - A 5-point checklist for choosing the right ESEF software

A 5-point checklist for choosing the right ESEF software

In the UK, mandatory compliance with ESEF requirements will begin with LSE-listed companies submitting their Annual Financial Reports for the financial year from January 1, 2021 to the FCA in the xHTML format.

The companies will have to place XBRL tags only against the basic financial information in their AFRs for the financial year just mentioned. From the financial year that follows (beginning January 1, 2022), the companies will also have to tag the notes to the financial statements.

ESEF software

XBRL tags can be applied using software that is ESEF-ready — having passed the European market regulator’s field tests and being certified by XBRL International.

While there are multiple ESEF software solutions in the market to choose from, it would help to consider a few points before narrowing down upon the one solution that would best serve your company’s purpose.

Here’s a five-point checklist to help you:

ESEF software

The right credentials and certification

Make sure you research the background and credentials of the ESEF software or service provider. Check the years of experience the XBRL professionals on their team have, the countries they have worked in, and the number of iXBRL filings they have handled in the past. A software with the right credentials would help you fit the bill perfectly in terms of ESEF requirements.

ESEF software

Customer references

Ask for references from current customers of the ESEF software. Look for references from other countries where issuers are required to comply with ESEF requirements as well — requiring familiarity with the IFRS taxonomy, needing to submit documents in the iXBRL format, dealing with aspects such as extensions and anchoring, and handling stylized documents, among others.

ESEF software

Ability to handle stylized documents

Ensure that the ESEF software vendor handles tagging on the face of a human-readable financial statement and not on an MS Excel template. If you are presented with an Excel template, beware. It isn’t the iXBRL format. An Excel document cannot accommodate the customized styling and design of the AFR. Ensure that you do not fall short of the ESEF requirements when it comes to the appearance of your ESEF documents.

ESEF software

Flexible working models

Does the ESEF software under consideration offer you the flexibility to choose between in-house and outsourcing conversion options or a blend of both approaches?  Also, does the iXBRL solution have any additional disclosure management modules to help streamline your overall annual report preparation process? Take care to choose just the right mix to help you perfectly comply with ESEF requirements.

ESEF software

Support anytime you need it

A new regulation often needs careful attention and implementation in line with the ESEF requirements. The ESEF software provider under your consideration should offer adequate support and expert assistance whenever you need it. Check if the provider works in your time zone and make sure that you are adequately covered for whenever you need help. Find out what is the best way to access support — email, phone, or online chat. Also check if you are going to be charged extra for any additional support hours.

We hope our 5-point checklist would be of help to you in picking the ESEF software that serves you best. If you need help or consultation on complying with ESEF requirements, or if you would like to see a demo of an ESEF solution tried and tested in mainland EU, get in touch.

Contact Our Experts

ESEF software

ESEF software

ESEF software


iXBRL format ixbrl format - What is the iXBRL format that HMRC wants company accounts to be submitted in?

What is the iXBRL format that HMRC wants company accounts to be submitted in?

Her Majesty’s Revenue & Customs (HMRC) mandates companies in the UK to file their tax returns with it by creating a legal obligation for each company in the form of a ‘Notice to deliver a Company Tax Return’ or CT603. ixbrl format

In 2011, the HMRC Commissioners’ Directions under the Income and Corporation Taxes (Electronic Communications) Regulations 2003 mandated that companies in the UK submit their accounts in iXBRL format if they have been prepared under the purview of:

A. Companies Act 2006
B. Building Societies Act 1986
C. Friendly and Industrial Provident Societies Act 1968
D. Friendly Societies Act 1992
E. Insurance Accounts Directive (Miscellaneous Insurance Undertakings) Regulations 2008

As part of the Corporation Tax return, the HMRC also requires companies to submit their financial statements in the Inline XBRL or iXBRL format.

iXBRL format

What is XBRL?

XBRL or eXtensible Business Reporting Language, is a business reporting standard that facilitates the exchange of business information through the placement of machine-readable tags against the disclosures in a financial document from the backend. The standard helps increase the transparency and accessibility of business information. The XBRL Specification is developed and published by XBRL International, Inc. (XII) and many financial and regulatory reporting regimes have mandated its use globally.

Inline XBRL or iXBRL format

Inline XBRL or iXRL is a more advanced reporting format wherein a single document becomes human-readable as well as machine-readable. A document in the iXBRL format is an xHTML file with XBRL tags embedded. The basic idea of developing iXBRL is to allow prepares to retain the original view or formatting of the source document, while creating an XBRL document. The xHTML representation of the information helps the document to be human-readable.

XBRL and iXBRL — the difference

XBRL iXBRL
  • Only machine readable
  • Machine and human readable
  • XBRL output appears in tables
  • iXBRL output appears as what-you-see-is-what-you-get
  • You would need a special application called XBRL viewer to view or render the data
  • iXBRL output can be rendered on any standard browser
  • Offers limited flexibility for formatting
  • iXBRL offers several options to format data and helps retain a report’s formatting
  • An XBRL instance (machine readable instance) must be filed separately along with a human-readable HTML instance
  • iXBRL allows for the filing of human readable as well as machine readable formats via a single instance document

Yet to see how an iXBRL document looks like? We have an example for you below.

The annual report in the iXBRL viewer link above is only for illustrative purposes and has not been fully tagged. Please open the link on Google Chrome, Chromium, or Microsoft Edge. The link may take up to a minute to load, depending on your internet speed.

The financial statement you see is in the xHTML format with XBRL tags embedded. The content with highlights indicates that XBRL tags are embedded behind such content.
__________

Fin-X Solutions offers IRIS CARBON®*, a disclosure management cum XBRL | iXBRL report creation software called. We have flexible offerings for HMRC, FCA(ESEF), and Revenue iXBRL filings.

*IRIS CARBON® is owned by IRIS Business Services, India, which is doing business in the UK under the trade name Fin-X Solutions. The firm and the product have no affiliation with UK’s IRIS Software Group.

iXBRL format

iXBRL format

iXBRL format

HMRC Mandate