All about the UK e-invoicing system: change on the horizon?

All about the UK e-invoicing system: change on the horizon?
Photo by Nick Fewings / Unsplash

e-Invoicing seems to be the word of the moment, with global mandates abuzz. The United Kingdom is no exception to this. The HM Revenue & Customs spoke to their intent to launch a consultation on an e-invoicing system, seeking input from businesses and other key players. 

UK e-invoicing

The consultation was previously announced in the Budget, delivered by The Chancellor of the Exchequer, Rachel Reeves, on 30 October 2024. The publication of the consultation is eagerly awaited by many businesses. The UK Government intends to create a digital VAT system that is fit for the future. Digital VAT systems assist in reducing errors, improving cash flow and can significantly reduce administrative tasks by allowing for B2B invoice automation. The primary benefit for the Government is that electronically managing data will close the tax gap that exists in the jurisdiction. 

Although the UK is much less advanced in the digital taxation space than other countries, this allows them the benefit of learning from the implementation successes and failures of systems implemented before. The successes can be tailored to the UK's particular environment, and much of the learnings taken will likely highlight both the benefits of e-invoicing as well as any challenges of e-invoicing. Adapting a system from prior learnings will likely encourage e-invoicing uptake, as errors will be mitigated from the onset of setting up e-invoicing. 

How does this compare to the global landscape?

The European Union (EU) is one such example of a pioneer in the digital taxation space. The VAT in the Digital Age (ViDA) Proposals that have been largely agreed upon, seek to address the introduction of e-invoicing and digital reporting (e-reporting) as one of their pillars in the proposal. These proposals were agreed at the meeting of the Council of European Finance Ministers (ECOFIN) on 5 November 2024, where approval of the package from all 27 Member States was achieved.

Since the original ViDA announcement in December 2022, many EU Member States have introduced their own real-time reporting and e-invoicing requirements. Businesses operating in the EU have therefore already had to prepare themselves for the change, including considering the data, systems, and commercial ramifications of the changes.

So, when is the consultation happening? 

The current UK position on the upcoming HM Revenue & Customs public consultation on e-invoicing is that Tristan Osborne, Labour MP for Chatham and Aylesford, asked the Chancellor of the Exchequer, what her planned timetable is for the proposed consultation on e-invoicing.

James Murray, Exchequer Secretary for the HM Treasury, provided the following answer: "At Budget 2024, the Chancellor of the Exchequer announced a public consultation on e-invoicing to promote its wider use across UK businesses and government departments. HMRC and Department for Business and Trade will be publishing a joint consultation with an expected publication date of early 2025. The consultation will run for 12 weeks and will be open to all business sizes and sectors, individuals, and software providers."

This long-awaited consultation has everyone waiting in anticipation to see what the general consensus is, and what the outcome will be. As an e-invoicing service provider, eezi-Powered by VAT IT will provide feedback on the consultation with the aim of using our learnings and expertise to make a meaningful contribution to the legal requirements that the UK seeks to introduce. 

Watch this space UK - e-invoicing is coming!

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