UK Launches Public Consultation on E-Invoicing and Digital Reporting

On 13 February 2025, the UK’s HM Revenue and Customs (HMRC) and the Department for Business & Trade launched a 12-week public consultation on the future of e-invoicing and digital reporting.

The goal of the consultation is to gather insights from businesses, trade associations, and tech vendors regarding the potential introduction of standardized or even mandatory B2B and B2G e-invoicing systems in the UK. This initiative is expected to shape the landscape of UK tax compliance and business operations.

Consultation Timeline and Objectives:

• February 13 to May 7, 2025: Public consultation period, where businesses and other stakeholders can provide feedback on the design, structure, and timing of the e-invoicing regime.
• June to October 2025: Review and analysis of the feedback, followed by the development of a proposed UK e-invoicing framework.
• November 2025: The UK Chancellor will announce the proposed e-invoicing regime during the Autumn Budget.

Looking further ahead, the UK government is considering a 2030 mandate for full adoption. Prior to this, there will be significant work done in 2026 and 2027 on legal and technical specifications, with multiple rounds of consultation, followed by pilots and testing in 2028-2029.

Key Areas of the Consultation:

1. Centralised vs Decentralised Models: Whether the UK should adopt a 4-corner or 5-corner model for e-invoicing, each representing a different level of control and interaction between taxpayers, intermediaries, and the tax authority.
2. Voluntary vs Mandatory Policy: The potential for voluntary adoption versus a full mandate for e-invoicing and digital reporting.
3. Timeframe for Preparation: How much time businesses will need to prepare for the implementation of mandatory e-invoicing.
4. Awareness and Adoption: The current awareness of e-invoicing in the UK and how adoption rates can be improved.
5. Government Use of E-Invoicing: How the government might adopt e-invoicing or real-time e-reporting and its potential use for pre-filled VAT returns.

Current E-Invoicing Status in the UK

At present, e-invoicing in the UK is voluntary for B2B transactions. Businesses can choose to issue e-invoices without prior approval from HMRC, as long as the invoices meet the required standards for VAT compliance. However, the only mandatory e-invoicing obligation for B2G transactions applies to invoices sent to NHS bodies, which must follow the EN16931 format and be sent via the Peppol network.

International Examples and Influence

The UK’s approach is largely influenced by the success of e-invoicing frameworks already in place across Europe and beyond. The EU has been pushing forward with its VAT in the Digital Age reforms, with countries such as Belgium, Poland, and France rapidly rolling out their own digital tax systems.

The consultation will play a crucial role in shaping the final framework, and businesses are encouraged to provide feedback to help ensure that the transition to e-invoicing is as smooth as possible.

There’s more you should know about e-invoicing in the United Kingdom – learn more about the new and upcoming regulations.