HMRC and the Department for Business and Trade (DBT) have launched a consultation 'Promoting electronic invoicing across UK businesses and the public sector'. Views are sought on standardising electronic invoicing and increasing its adoption in the UK.
Electronic invoicing, or e-invoicing, is the digital exchange of invoice information directly between buyers’ and suppliers’ financial systems, even if those systems differ.
The outcome is an invoice automatically generated into the buyer’s financial system without manual processing.
It is suggested that e-invoicing can:
- Simplify business processes and reduce administrative burdens.
- Improve business productivity and cash flow.
- Help businesses to get paid faster.
- Simplify a business’s tax reporting requirements and reduce errors in tax returns.
The UK trails behind its neighbours in considering E-Invoicing: over half of all OECD countries have mandated electronic invoicing, some introduced their legislation more than twenty-five years ago.
HMRC and the Department for Business and Trade (DBT) now want to understand how differing approaches to e-invoicing may integrate with business systems: this will support the development of a UK approach to e-invoicing and aid the government in understanding how to support the increased adoption of e-invoicing.
James Murray, Exchequer Secretary to the Treasury said:
"As part of the Prime Minister’s Plan for Change, we have begun our work to transform the UK’s tax system into one that is focused on helping businesses and the economy to grow.
E-invoicing simplifies processes, reduces errors and helps businesses to get paid faster. By cutting paperwork and freeing up valuable time and money, it will help improve firms’ productivity and their ability to grow and succeed."
Gareth Thomas, Minister for Services, Small Business and Exports, said:
"Small businesses are at the heart of our economy and vital to our growth mission. The potential of digitising taxes, speeding up payments and streamlining administrative tasks will provide real benefits to the economy, supporting smaller firms and boosting growth.
This is why we want to make sure e-invoicing works for SMEs, because cash flow can make all the difference between staying afloat or going under."
Topics that the government is interested in exploring in the consultation include:
- Different models of e-invoicing and both centralised and decentralised platforms are considered.
- With a centralised model, e-invoices are submitted to the tax authority before being issued to the buyer. The consultation states that this model does not always improve business efficiency and is costly for tax authorities to implement, as the government has to build a centralised system. HMRC does not plan to explore this model in detail.
- With a decentralised model, there is no central ‘hub’ through which invoices are routed. Businesses submit their invoices through their software providers directly to their customers.
- Whether to take a mandated or voluntary approach to e-invoicing.
- What scope of mandate might be most appropriate in the UK and for businesses.
- Options include mandating e-invoicing based on business size or based on the recipient of the supply (e.g. for business-to-business supplies or business-to-government supplies)
- Whether e-invoicing should be complemented by real-time or near-real-time digital reporting, where transactional data is submitted to the tax authority.
- It is suggested that this will allow HMRC to take further steps to simplify tax reporting and assist businesses in getting their taxes correct.
The consultation makes clear that there will be no immediate change and responses will be used to inform future decision-making.
The government is not looking to identify a specific standard or standards to adopt in the UK but seeks broader views on how standards could support e-invoicing adoption and increase potential benefits.
Responses are invited from businesses of all sizes (whether or not they use e-invoicing), interest groups, representative bodies, industry bodies and individuals.
The consultation closes on 7 May 2025. Responses can be submitted online or by e-mail.
Consultation questions
Question 1: Are you responding to this survey as:
- A business,
- A representative body.
- An organisation.
- An individual.
- Other (please provide details).
Question 2: Are you UK or internationally based? Please provide details.
Question 3: Are the views offered in your responses:
- Your own views.
- Your organisation’s views.
- Your members’ views.
Question 4: Where does your business operate? (please select all that apply)
- England.
- Scotland.
- Wales.
- Northern Ireland.
- Isle of Man.
- EU – please state which country.
- Non-EU – please state which country.
Question 5: What is your industry sector (such as accounting, finance, software, retail, construction or other)?
Question 6: To help us determine business size, please provide details on:
- Number of employees in your business.
- Annual turnover.
- A rough summary of how your sales are split (Business-to-Customer, Business-to-Business, Business-to-Government).
Question 7: How long has your business been operating?
Question 8: Do you use an accountant for your business?
Question 9: Please provide any further information about your organisation or business activities that you think might help us put your answers in context.
Question 10: What is your interest in e-invoicing? Are you a:
- Potential or current user of e-invoicing.
- An e-invoicing service provider.
- A tax/accountancy provider.
- Other (please provide details).
Question 11: Prior to this consultation, were you:
- Aware of e-invoicing and a current user.
- Aware of e-invoicing and a previous user who has since ceased using e-invoicing.
- Aware of e-invoicing, but chose not to adopt.
- Unaware of e-invoicing.
Question 12: If your business currently uses e-invoicing, when did you implement it?
Question 13: If you are a current, or former user of e-invoicing, could you comment on any benefits or drawbacks you have experienced?
Question 14: If you were previously aware of e-invoicing but have chosen not to adopt it, could you explain why?
Question 15: How many invoices (whether paper, PDF, e-invoice or other) do you send and receive each month?
Question 16: What is your average processing time and cost per invoice?
Question 17: Bridging software allows businesses to connect non-compatible software (like spreadsheets) to HMRC’s Making Tax Digital system. Do you currently use bridging software?
Question 18: Do you think there are any other benefits and priorities on e-invoicing that the government should focus on?
Question 19: What data do you think is important for a standard to include, and do you have any preference over the structure of information?
Question 20: Are you familiar with any e-invoicing standards? If yes, what is your preference on what works well and why?
Question 21: Would the UK adopting a single shared standard encourage you to take up e-invoicing?
Question 22: Do you have any suggestions on how the government could support increased adoption under a voluntary system?
Question 23: Do you have any observations, concerns, or recommendations on a move to mandatory e-invoicing for Business-to-Business or Business-to-Government domestic transactions?
Question 24: If the UK were to introduce a mandate, how long would you need to implement e-invoicing in your operations?
Question 25: What would present a significant barrier to you complying with a mandate?
Question 26: Given the information provided and your own knowledge, do you think it is correct for the government to focus on a decentralised model over a centralised model?
Question 27: How would a decentralised four-corner model impact your business operations?
Question 28: What are your views on an e-invoicing system with real-time reporting for Business-to-Business and Business-to-Government transactions?
Question 29: Would any additional services support your business activity (such as nudges and prompts or potential future use to pre-populate VAT returns)?
Question 30: Thinking about all the models and approaches discussed, which best meets the policy objectives listed at the beginning of the document and any others you may have identified?
Question 31: If the government was to move towards one of the discussed options, what support would be needed and how would that change between the different approaches?
Question 32: Are you content for us to contact you if we have any questions about your response?
Question 33: Are there other technical issues that you think we should look at further?
Question 34: Is there anything else you would like us to be aware of relating to a potential future UK policy on e-invoicing?
Useful guides on this topic
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A recent National Audit Office (NAO) report compares measures adopted by other countries to reduce instances of VAT and sales fraud with the UK's approach. It reveals that the UK is seriously lagging in terms of its adoption of technological solutions.
Penalties: Electronic Sales Suppression
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External link
HMRC/DBT: Promoting electronic invoicing across UK businesses and the public sector
