HMRC and the Department for Business and Trade have published their UK e-invoicing consultation paper.
Background to this development here and here.
E-invoicing is the digital exchange of invoice information directly between buyers’ and suppliers’ financial systems, even if these systems are different. The outcome is an invoice which is automatically written into the buyer’s financial system without manual processing.
E-invoicing automates the exchange of invoices between buyers and suppliers. The government says that increased e-invoicing uptake may support economic growth, business productivity, improve business cashflow and reduce errors in tax returns. It has the potential to both support businesses and tax administration.
The consultation aims to understand how e-invoicing aligns with businesses and their customers. Responses from businesses of all sizes – whether they use e-invoicing or not – as well as interest groups, representative bodies, industry bodies and individuals are encouraged.
The purpose of the consultation is to seek input on how the government can support the increased adoption of e-invoicing. The main points are:
- different models of e-invoicing
- 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
- whether e-invoicing should be complemented by real time digital reporting
This would be a significant change to VAT and all businesses should understand the impact.
More on VAT in the Digital Age (ViDA), including Real-time digital reporting here.