February 17, 2025 Consulting on e-invoicing
Could electronic invoicing (e-invoicing) help to smooth out business processes and improve tax reporting? That’s the basic premise of a new government consultation into the adoption of e-invoicing in the UK.
The consultation, which has been jointly launched by the Department for Business and Trade and HMRC, aims to build an understanding of the current use of e-invoices in the UK and the benefits and challenges which universal adoption could bring. As such, the consultation is looking for responses from businesses of all sizes, whether they deal in business to business, business to consumer, or business to government trade. Accountancy, IT, and tax professionals are also asked to respond in order to build the fullest picture possible which will inform the next steps in any e-invoicing introduction.
Acknowledging the need to take every type of business into consideration, from sole traders upwards, the Minister for Services, Small Business and Exports, Gareth Thomas, 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.”
In tandem with the consultation, research from Sage concluded that e-invoicing could lead to productivity gains of around 3%. This is due to the streamlined process reducing the need for manual tasks such as data entry and tax filing. The consultation also cites the example of an NHS trust which has already adopted e-invoicing; resulting in a payment turn-around of twenty-four hours as opposed to ten days, and a 15% reduction in supplier queries.
In launching the consultation which closes on 7th May, the government acknowledges that some countries have already adopted a mandatory e-invoicing process, whilst others have gone down the voluntary route. This has led IT companies to look to include the ability to e-invoice in their accountancy software packages. However, for e-invoicing to work seamlessly it is important that these packages can interact, leading for a need for standardisation of protocols; something the consultation is looking closely at.
The consultation is also requesting industry views on the various merits of centralised, decentralised and real time reporting models. Examples of how each of these models might work are included in the body of the consultation.
