IOTA Paper Proposes Automated Assessments for VAT Discrepancies

A September 2026 paper published by IOTA, the  Intra-European Organisation of Tax Administrations, proposes a procedure for turning discrepancies between reported invoice data and VAT returns into enforceable assessments, without requiring a full audit in every case.

Written by Ferenc Vágujhelyi, former Commissioner of Hungary’s tax authority, it argues that digital reporting enables authorities to identify discrepancies at scale, but traditional audits lack the capacity to address them all.

The paper describes a “credibility gap when all discrepancies are systematically revealed but consequences are left unaddressed”.

Under the proposed Data Reconciliation Procedure, taxpayers would receive an itemised digital notice and a fixed period to correct their return or invoice data, explain a legitimate difference, or request human review for complex issues. Failure to respond adequately by the deadline would trigger an automated assessment, subject to appeal.

Automation would be limited to arithmetic and timing discrepancies provable from invoice data and statutory rules. VAT self-assessment would remain in place.

For finance and indirect tax teams, the proposal highlights the importance of reconciling reported invoices, credit notes and VAT returns, and being able to explain legitimate differences promptly.

The paper is the author’s policy proposal, not an adopted regulatory requirement.

IOTA