UK Government Launches Public Consultation on E-Invoicing

The UK Tax Authority (HMRC) and the Department for Business and Trade (DBT) have launched a joint consultation to explore how e-invoicing can better align with businesses. Open for 12 weeks, the consultation seeks input from businesses of all sizes—whether they currently use e-invoicing or not—as well as industry bodies, interest groups, and individuals. The consultation closes on May 7, 2025.

Purpose of the Consultation

The UK government aims to gather feedback on standardizing electronic invoicing (e-invoicing) and increasing its adoption across both the public and private sectors. Key topics under review include:

• Different models of e-invoicing
• Whether e-invoicing should be mandatory or voluntary
• The appropriate scope for a potential mandate
• Whether e-invoicing should be integrated with real-time digital reporting

Current State of E-Invoicing in the UK

Although e-invoicing is used in the UK, there are no standardized guidelines for its format, content, application, or delivery. As a result, businesses use multiple, often incompatible approaches. The exception is NHS England suppliers, who are required to issue e-invoices via the Peppol network.

While several accountancy software providers offer e-invoicing capabilities, overall adoption remains low. However, the consultation highlights evidence that increased e-invoicing usage can offer significant benefits, including:

• Improved productivity by reducing administrative burdens and costs
• Enhanced cash flow through faster payments and better data
• Simplified tax reporting by minimizing errors and supporting tax compliance

Key Areas of Focus

Tax Reporting and Compliance

HMRC is gathering insights on:

• Invoice volumes and processing costs
• The role of bridging software in tax reporting
• How e-invoicing could reduce manual errors and improve automated tax reporting
• The potential for real-time reporting to ease administrative burdens and enhance data accuracy

Business Benefits

• Cost Reduction & Efficiency: The consultation cites industry data that e-invoicing could lower processing costs by 60-80%, reduce manual tasks, and accelerate payments.
• Fraud Prevention: Digital validation and secure data exchange can reduce fraud risks.
• Environmental Impact: Reducing paper reliance supports sustainability initiatives.

E-Invoicing Standardisation

Currently, the UK lacks a mandated standard beyond NHS requirements. The consultation explores:

• The role of interoperability and international alignment
• How standardization could enhance business efficiency and facilitate trade

Implementation Models: Voluntary vs. Mandated Adoption

Countries like Singapore and Australia use voluntary e-invoicing models with interoperability standards, while others, like Italy, mandate its use. The consultation seeks feedback on:

• The advantages and challenges of voluntary vs. mandatory adoption
• How long businesses would need to transition if a mandate were introduced

Decentralised vs. Centralised Models

• A decentralised ‘4-corner’ model, where businesses use private software providers, aligns with the UK’s Making Tax Digital initiative.
• A centralised model, requiring invoice submission to a government platform before issuance, is used in Italy but may be more costly and complex.

Real-Time Reporting & Continuous Transaction Controls (CTC)

The government is also exploring how real-time data sharing with tax authorities could:

• Enhance compliance
• Reduce tax fraud
• Improve overall efficiency in tax reporting

Industry Input Needed

The government is calling for feedback on:

• Barriers to e-invoicing adoption
• Preferences for standardization
• Compliance challenges
• The feasibility of voluntary vs. mandatory models

Input from businesses will help shape the UK’s e-invoicing framework and its alignment with international best practices.

For more details and to respond to the consultation visit the UK Government website here.