What is E-Invoicing?
E-Invoicing, also known as electronic invoicing, involves creating and sending digital invoices in a structured format that enables automated invoice processing. It allows businesses to send and receive invoices digitally, facilitating faster processing, cost reduction and greater compliance with regulatory demands.
On the 13th February 2025, HMRC and the Department for Business and Trade (DBT) launched a consultation to gather views on promoting electronic invoicing across UK businesses and the public sector.
The consultation aims to make it easier for businesses to adopt e-invoicing by cutting setup and running costs and ensuring the systems are easy to implement and use.
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Why E-Invoicing?
The global trend is shifting towards widespread adoption of e-invoicing, as it can significantly reduce administrative tasks, improve cash flow, boost productivity, and introduce automation, thereby helping to close the tax gap.
The move towards wider adoption of e-invoicing is a positive development for the UK's economic landscape and it aligns with initiatives like the UK’s making tax digital (MTD) and EU’s VAT in the Digital Age (VIDA).
The Impact on UK Businesses
The aim of HMRC and DBT’s consultation is to understand the impact for UK businesses of different models of e-invoicing, whether to take a mandated or voluntary approach to e-invoicing, what the scope would need to be and whether e-invoicing should be complemented by real time digital reporting. They are particularly interested in how different e-invoicing approaches align with various business operations, what challenges businesses face in adopting wider electronic invoicing and how to make the transition smoother. This will support development of a UK approach to e-invoicing that improves business productivity by reducing admin burdens and helping businesses to get their tax right.
This is a major development for UK businesses and although the consultation refers to a voluntary option, we believe that it is more a question of when and how rather than if mandatory e-invoicing will be introduced. We see e-invoicing as a crucial milestone in the digitalisation of the UK tax system, albeit it being disruptive to current finance, tax and enterprise resource planning (ERP) processes.
The consultation period runs until 7 May 2025, providing a platform for stakeholders to share their perspectives and inform future policy development. Participation in the consultation process is being sought by HMRC and the DBT from all stakeholders, including interest groups, representative bodies, industry bodies and individuals regardless of whether or not they use e-invoicing.
This is an important opportunity whereby those stakeholders can contribute to the future policy development of e-invoicing in the UK and influence how this important digital technology development takes shape in the UK.
