Move towards mandatory electronic invoices will aim to modernise financial processes, reduce errors and close the ‘tax gap’
The UK government has announced it plans to hold a consultation on using electronic invoicing (e-invoicing) more widely across the UK, details of which are expected to be launched “soon”.
According to a statement released after Chancellor Rachel Reeves’ speech at the Labour Party conference in September, the consultation will “gather business feedback on how HMRC can encourage e-invoicing uptake”.
E-invoicing is the creation, exchange, verification and storage of invoice documentation between a supplier and a buyer in a structured and standardised electronic format. It is not emailing a PDF or Word invoice document to a supplier or scanning a paper invoice into digital form.
E-invoicing is gaining global traction – the EU's VAT in the Digital Age (ViDA) proposals include an EU-wide mandate for real-time digital reporting for cross-border trade based on the standardisation of e-invoicing. If the ViDA proposals are agreed, the e-invoicing and digital reporting rules are currently due to be effective from 1 July 2030.
Jun Miyake, principal of tax technology at tax advisory firm Ryan, said: “We welcome the announcement of a consultation aimed at promoting the adoption of e-invoicing in the UK, especially as the rest of Europe moves towards this system in the short to medium term. This initiative is a positive step towards modernising our financial processes and aligning with other tax jurisdictions in Europe and around the world.
“However, the success of this initiative will depend on the details of the system the UK government proposes to adopt, which have yet to be revealed. We look forward to seeing a robust framework that supports businesses in transitioning to e-invoicing and enhances efficiency in the invoicing process.”
The government said that “the introduction of e-invoicing can significantly reduce administrative tasks, improve cash flow, boost productivity, introduce automation, and reduce errors in tax returns – all helping to close the tax gap.”
Global accountancy firm EY said: “Although no detailed e-invoicing proposals have yet been issued, businesses operating in the UK should be aware that the adoption of mandatory e-invoicing would be a significant development, which would likely have far-reaching implications.”
The firm added that a new Digital Transformation Roadmap, which the UK government aimed to publish in spring 2025, will set out HMRC's vision to be a 'digital-first' organisation. The Roadmap will include measures to ensure digital inclusion and support for businesses that cannot yet interact digitally.
Philip Smith is editor of The Treasurer
