HMRC publish e-invoicing consultation

HMRC and the Department for Business and Trade (DBT) have published a consultation on UK e-invoicing in order to gather views on standardising e-invoicing and increasing adoption of e-invoicing across UK businesses. E-invoicing automates the exchange of invoices between buyers and suppliers, a process that can be used to support tax reporting and compliance. HMRC and DBT are seeking to understand how differing approaches to e-invoicing may integrate within business systems with a view to ensuring that the UK develops an approach to e-invoicing which improves business productivity by reducing administrative burdens and improves tax compliance. Responses will be used to inform future decision making on this issue.

In particular, the consultation addresses many questions around:

• Different models of e-invoicing
• Whether to take a mandated or voluntary approach to e-invoicing
• What scope of mandate might be most appropriate
• Whether e-invoicing should be complemented by real time digital reporting.

It is clear that this is the first stage in a potentially lengthy process aimed at deciding whether, and if so how, the UK should introduce an e-invoicing system. The consultation provides no defined timeline and no decision has yet been made on whether or how to take this forward. However, the Labour Party has previously stressed the benefits of digitalisation for closing the tax gap and it would be a surprise if these proposals were not taken forward in due course.

The consultation notes that many other jurisdictions have some form of e-invoicing already in place and that successful examples of e-invoicing implementation have included collaborative policy development between government and businesses to ensure that the right support is offered and realistic adoption timelines are introduced.

The consultation runs until 7 May 2025 and responses should be sent to einvoicingconsultation@hmrc.gov.uk. Quite apart from the consultation, HMRC are also intending to run business roundtables and other events through which businesses can contribute to future policy development. Those interested in attending these events should contact: einvoicingengagement@hmrc.gov.uk.

Next steps

HMRC and DBT will use responses to this consultation to inform future policy development. A summary of responses will be published in due course. The government is likely to run further engagement in future on technical issues around e-invoicing, including the design of specific software standards, business identification schemes and specific sectoral needs.

Implementing e-invoicing in the UK would mark a significant advance in the UK tax system's approach to digitalisation. The UK currently operates  Making Tax Digital for VAT which requires businesses to keep digital records and file tax returns using compatible software. The UK e-invoicing consultation provides an opportunity for businesses to input their views on much broader approach to UK e-invoicing and their experiences of implementing e-invoicing in other jurisdictions.