HMRC Consultation Feedback and Autumn Budget Policy

The Government’s use of consultation to develop tax policy is welcome. But consultation only works if the responses received are properly considered and can influence the decisions that follow.

With several consultations launched as part of HMRC’s Tax Update 2026 already closed, or due to close in September, there is now a relatively short window for HMRC and the Government to assess feedback before the Autumn Budget.

For businesses and individuals, this is more than a matter of process. Consultation outcomes can influence the rules they operate under, the systems they need to use and, ultimately, the cost and complexity of complying with their tax obligations.

Consultation must lead to meaningful policy decisions

Elisa Sofocli, Partner, said:

It is encouraging to see HMRC and the new Government engaging with businesses and stakeholders before decisions are made. But the success of the consultations announced in HMRC’s Tax Update 2026 will ultimately be judged by whether the feedback received genuinely influences policy in the upcoming Autumn Budget

Businesses, advisers and taxpayers invest significant time responding to consultations. They need confidence that their contributions are helping to shape policy rather than simply validating decisions that have already been made. A number of the consultations have already closed or close in September, a month ahead of the Autumn Budget, creating plenty of scope for HMRC and the Government to use stakeholder feedback to inform policy.

This is particularly important at a time when businesses are already navigating significant changes to the tax system. Clear communication and genuine engagement can help reduce uncertainty, whereas policy developed through speculation can have the opposite effect.

A more constructive alternative to tax policy by speculation

Consultation is undoubtedly preferable to policy being developed through rumours and kite-flying, as seen in the run up to the 2025 Budget, which can create market noise, fuel speculation and undermine business confidence.

For businesses making investment, hiring or restructuring decisions, uncertainty can have a real economic cost. A transparent consultation process gives businesses greater visibility over the direction of travel and an opportunity to highlight unintended consequences before changes become law.

The key issue is therefore not simply whether consultations take place, but whether the process results in practical improvements to policy.

Tax administration is becoming as important as tax rates

While many of the individual measures in HMRC’s Tax Update 2026 may appear modest and technical in isolation, they reveal a significant transformation in how the tax system is administered, with greater reliance on digital data, more real-time interactions and a stronger focus on reducing friction between taxpayers, businesses and HMRC.

The UK tax system is becoming more digital, more automated and increasingly capable of collecting tax at, or much closer to, the point income is earned. In many respects, HMRC is pursuing the same cash flow objectives that businesses do every day, using technology and real-time data to accelerate collection and reduce the delay between a transaction taking place and tax being received by the Treasury.

This could ultimately make compliance more efficient, but it also means businesses need to consider whether their systems, processes and data are ready for increasingly real-time tax administration.

Administrative changes can have significant consequences

This is the case, whether the subject is more timely tax payments, e-invoicing, digital VAT processes, customs modernisation or reducing administrative burdens, there is a consistent objective of embedding tax compliance more seamlessly into day-to-day business and financial activity.

While many of the proposals in Tax Update 2026 are administrative rather than fiscal, that should not lead anyone to underestimate their significance. Administrative reform often has just as much impact on taxpayers and businesses as changes to tax rates themselves.

For businesses, the potential impact could include new technology requirements, changes to internal processes, additional reporting obligations and training costs. For individuals, particularly the self-employed and landlords, increased digital reporting could create a greater administrative burden.

Some changes could be a new equivalent of Making Tax Digital’ (MTD) for Income Tax. MTD has created the need for many self-employed tradespeople and landlords to start filing quarterly tax declarations. Hence taxpayers need to watch any legal changes which come out of these consultations, as it could result in significant additional administration for them.

The challenge for policymakers will be to ensure that greater digitalisation delivers genuine benefits rather than simply transferring compliance costs from HMRC to taxpayers.

What should businesses and individuals consider/do next?

The consultations currently underway should be viewed as part of a wider shift in the UK tax system, rather than as isolated technical changes.

Elisa concluded:

Taken as a whole, the update points to three consistent themes: reducing the tax gap through better use of data, improving the efficiency and timeliness of tax collection, and making it easier for taxpayers to get their tax right first time

Businesses and individuals should therefore:

• Monitor consultation outcomes and Budget announcements, particularly where proposals could affect reporting, payment or record-keeping requirements
• Review existing tax processes and systems to identify where greater digitalisation or real-time reporting could require changes
• Assess the potential compliance cost, not just the headline tax impact, of proposed reforms
• Engage with advisers early where upcoming changes could affect systems, cash flow or administrative responsibilities
• Consider whether consultation feedback has addressed practical concerns, particularly around implementation, proportionality and unintended costs

The Autumn Budget will provide an important test of whether the Government’s commitment to consultation translates into policy that reflects the experience of those expected to operate the tax system in practice.

Would you like to know more?

If you would like to discuss this in more detail, please get in touch with your usual Blick Rothenberg contact or Elisa Sofocli using the form below.