Regulatory updates - United Kingdom

On February 13, 2025, the UK took yet another step towards implementing e-invoicing across the country, as the public consultation was launched, and the open consultation document was published.

The public consultation document addresses the main benefits of an e-invoicing system while keeping the outlook on how such a system should look open. The document underlines the importance of establishing common e-invoicing standards to facilitate trade and for business systems to effectively interact with each other. Furthermore, it underlines that increased adoption of e-invoicing may improve productivity, cashflow, simplify tax reporting, and reduce the tax gap.

As part of the agenda to increase adoption rates, these initial stages will therefore focus on open policymaking and strong engagement, as the HMRC (His Majesty's Revenue and Customs) and DBT (Department for Business and Trade) seek opinions into four broad areas:

• Models of e-invoicing, infrastructure and format;
• Whether e-invoicing should be mandated or voluntary;
• Which actors should be in the scope of a mandate;
• Whether e-invoicing should be complemented by real-time digital reporting.

The consultation will guide future decision-making

The HMRC and DBT emphasize that the responses aim to inform future decision-making, and no timelines or actions following the public consultations are announced at this stage.

How to participate in the consultation

Stakeholders participating in the consultations may send responses either through the official public consultation form or via e-mail to: [email protected], no later than May 7, 2025.

The UK government is taking a significant step toward modernizing its tax system by introducing e-invoicing, as announced by Chancellor Rachel Reeves. This new reform is part of the broader Digital Transformation Roadmap, with full implementation expected in 2025. The goal is to simplify financial processes for businesses and improve tax compliance across the country.

A public consultation will be launched soon to gather feedback from businesses on how best to implement e-invoicing. This will help ensure a smooth transition as the government prepares to make e-invoicing the standard process across private companies and government departments.

This initiative, set to roll out in spring 2025, is part of the government's effort to close the tax gap and enhance compliance. The details of the new e-invoicing framework will be finalized in the upcoming Digital Transformation Roadmap, outlining the vision for a more efficient and digital-first tax system.

The UK government has implemented a statute to legally compel e-invoicing in all public procurement through “The Public Procurement (Electronic Invoices etc.) Regulations 2019.”

A Procurement Policy Note (PPN) from the Cabinet Office said: “Contracting authorities and other contracting entities (utilities) are now required to receive and process supplier invoices that comply with the technical e-invoicing standard developed under the Directive.”

The requirements were applied to the central government last year, whilst local government bodies and utilities were given until 18 April 2020 to comply “but were okay to voluntarily do so earlier,” according to the PPN.

“The regulations require contracting authorities and entities to include in their contracts an express term which obliges them to accept and process undisputed invoices that comply with the technical e-invoicing standard,” said the PPN.

“The Directive aims to address the use of varied e-invoicing formats across the member states through the introduction of a standard. These varied formats cause unnecessary complexity and additional operating costs for businesses, public contracting bodies and contracting entities.”

Whilst the legislation came into force at a time of unique challenge on public sector supply chains, the prior introduction of the Peppol infrastructure into the NHS helped early adopters ensure far more robust supply chains during the first wave peaks of COVID-19.

Anna Micklewright, head of healthcare sales at Pagero, commented: “COVID-19 has shown the importance and frailty of public sector supply chains at a time when we rely upon them the most. Those suppliers that serve the public sector will rely on more efficient processes from their public sector partners and it's imperative that this can be implemented to manage services throughout. The UK e-invoicing legislation is an important first step in helping strengthen communications between suppliers and buyers.”