The UK government has opened a consultation on whether HM Revenue and Customs should gain access to selected electronic invoice data in future, while making clear that it has not decided to introduce a digital reporting system. Published on 28 October, the exercise asks businesses and software providers to show whether such access could reduce paperwork, help identify tax errors earlier and improve public services.

The consultation runs until 20 January 2027. For companies, the key distinction is between an existing e-invoicing implementation programme and a possible additional use of the information that programme will generate. The government says respondents are not being asked to make system changes or take other action in anticipation of the digital reporting consultation's outcome.

E-invoicing and tax reporting are separate decisions

VAT invoices will have to be issued electronically in a specified format from 1 April 2029, according to the official consultation. E-invoicing means exchanging structured information directly between a buyer's and a supplier's financial systems. The government announced the requirement at Budget 2025 and says it has now published an implementation roadmap covering matters including standards, legislation, testing and support.

Digital reporting would be a separate step: sharing selected invoice information, or providing access to it, for specified purposes. HMRC says the concept does not mean it would automatically receive every invoice or all the information contained in each one. Any future arrangement would need its own policy, legal, technical and impact decisions. The document does not set out a preferred system, detailed data requirements or draft legislation.

One potential use is identifying mistakes before a VAT return is submitted. HMRC says it sometimes becomes aware of inconsistencies only after receiving a return. Timely invoice information could allow the department or accounting software providers to alert businesses earlier. However, the consultation acknowledges that any useful intervention would depend on the information being reliable and sufficiently complete, and on an error actually being detectable from invoice data.

Another proposed area for examination is VAT repayment checking. Businesses and tax agents can currently be asked to provide invoices to support a repayment. Consistent access to relevant information might reduce the manual work involved and help resolve some legitimate claims more quickly. The department is asking where that would materially improve decisions, rather than simply give officials another source of information without the context they need.

Costs, confidentiality and practical benefits under scrutiny

The consultation also asks whether existing information requests and compliance checks could be reduced. It explicitly raises the risk that a new reporting arrangement could add an obligation without removing an old one. Businesses are being asked which reporting or evidence requirements could realistically be simplified, and what concrete benefits they would need to receive for additional data access to be worthwhile.

Technical questions include whether existing accounting software and electronic document networks could supply selected data without businesses having to re-enter information or operate a separate reporting process. The government wants evidence about commercial and operational barriers as well as technical feasibility. Software development, testing, onboarding, correcting data and ongoing customer support are among the potential costs it identifies.

Smaller firms and organisations using older or complex systems are specifically within the assessment. The document says impacts could vary with company size, sector, international activity and digital capability. It seeks evidence about who would pay for any changes and whether existing costs could be removed. No quantified saving for businesses is established by this consultation.

Invoice data may contain commercially sensitive or otherwise protected information. The safeguards under consideration include restricting access to defined purposes, collecting no more information than necessary, protecting confidentiality and providing routes to correct errors. Retention, deletion, transparency and accountability would also have to be considered as part of the design, not added after a system had been chosen.

Potential wider government uses are being explored too, including economic analysis and reducing overlapping requests from public bodies. The government says it is not assuming that individual transaction data would be necessary or appropriate for those purposes. Any wider use would need a clear public purpose, demonstrable value and suitable legal and security arrangements.

Written responses will be considered alongside workshops, technical discussions and further work with businesses, agents and providers. The next decision is whether the evidence supports developing options at all; further consultation could follow if it does. Readers following other UK business measures can also find Dalimss News coverage of the new venture-debt package for scale-ups and patent filing and renewal service changes.

Contains public sector information licensed under the Open Government Licence v3.0.