E-invoicing involves the creation, exchange, verification, and storage of invoices in a structured electronic format between suppliers and buyers. This is highly disruptive for businesses, as current finance functions tend to heavily rely on the (manual) issuing and processing of paper-form invoices in a human readable format such as PDF.

Not raising e-invoices therefore equals not getting paid and non-compliance. As a result, businesses will have to adopt a means of being able to both issue and receive e-invoices.

The HMRC and DBT consultation sought views on proposals for standardising and increasing adoption of e-invoicing across UK businesses and the public sector, which may support: reduced costs and administration for businesses; greater visibility and improved processing times; improved business cash flow; error reduction; the secure exchange of digital data to reduce identity and VAT invoice fraud risks; improved data quality and automated tax reporting; and, more tailored HMRC interventions.

The topics covered included: different models of e-invoicing; whether the government should take a mandated or voluntary approach to e-invoicing; what scope of mandate might be most appropriate in the UK and for businesses; and, whether e-invoicing should be complemented by real time digital reporting.

RSM’s response to the consultation identifies some of the main strategic and practical considerations that the government will need to explore in more depth before implementation. The consultation response indicates that we are supportive of e-invoicing as a means of generating operational efficiencies for business and HMRC, reducing the tax gap, and maintaining UK competitiveness in global markets.

We note the need for appropriate standardisation and the challenges faced in any voluntary model meeting all the government’s objectives. Notwithstanding the importance of deciding upon the strategic approach to be adopted to meet the government’s objectives, we are conscious that there are a significant number of detailed aspects that would need to be worked through, in consultation with stakeholders, in advance of any implementation.