E-invoicing requirements in the United Kingdom
While the UK has not mandated B2B or B2G e-invoicing (except for invoicing the National Health Service (NHS)), as part of its VAT system there are formal legal requirements relating to the issuing, receiving and storing of e-invoices. Businesses need to adhere to these where they or their customers have agreed to receive e-invoices on a voluntary basis.
In addition, under HMRC’s ‘Making Tax Digital’ initiative, UK VAT registered businesses must submit their UK VAT return to HMRC via an API using MTD functional compatible software. The only data submitted via the API is the standard summary 9-Box VAT return and there is no e-reporting of individual transactional data or invoices. Transactional level detail for sales and purchases must be stored in digital records in software and be provided to HMRC in the event of an audit, inspection or information request. There is however no specific Standard Audit File for Tax (SAF-T) in the UK.
B2B e-invoicing in the UK
As there is no general e-invoicing mandate in the UK, a supplier must always receive the customer’s (the buyer) agreement and acceptance to receive e-invoices.
There is no explicitly mandated format for an e-invoice in the UK. Businesses are required to ensure the authenticity of the issuer and the integrity of the contents of the e-invoice. However, there is no prescribed method to do this, and general businesses controls are usually accepted. HMRC’s Public Notice does explicitly mention both Advanced Electronic Signatures and Qualified Electronic Signatures as acceptable examples of meeting these requirements (but these are not mandatory). Where the e-invoice is in a machine-readable format e.g., XML, the supplier must provide the ability for human-readability and legibility.
E-invoices (and paper invoices) must be retained for six years after end of the accounting year. While there are no formal archiving requirements, invoices must be stored in such a way as to guarantee their integrity, authenticity and availability during the entire lifetime of the invoice. HMRC may request physical or remote access to the e-invoice archive or request specific data on electronic media.
B2G e-invoicing in the UK
There is no general B2G e-invoicing mandate in the UK. However, the UK has required government departments to be able to receive e-invoices from suppliers. In this regard, Peppol standards (based on the European e-invoicing standard) have been adopted as an acceptable standard for purchase order and invoice messages and are required to be exchanged through Peppol Access Points. The exception to voluntary B2G e-invoicing in the UK relates to supplies to the NHS.
National Health Service procurement – selling goods/services to the NHS
In accordance with the UK Government procurement policy mandating carbon reduction and other social and environmental considerations being integrated into public procurement process, the NHS has moved to full paperless e-invoicing.
With effect March 31, 2022, all invoices submitted to NHS Shared Business Services (NHS SBS) must be submitted electronically via the NHS’s Tradeshift e-invoicing platform. The platform has Electronic Data Integration (EDI) functionality to enable suppliers to integrate with their existing ERP or invoicing system. It is anticipated that through mandatory e-invoicing, there will a reduction in invoice rejections as there will be invoice data entry validation rules.
B2C e-invoicing in the UK
As there is no general e-invoicing or fiscalisation mandate in the UK, a supplier must ensure that any invoices or receipts issued to consumers are compliant with UK VAT legislation. In addition, HMRC has recently introduced new powers and penalties to tackle the supply, promotion and possession of electronic sales suppression software and hardware, with penalties of up to £50,000.
Summary of E-Invoicing and E-Reporting requirements in the UK
Local Country rules
B2G e-invoicing mandate
No mandate (voluntary except for supplies to NHS)
B2B e-invoicing mandate
No mandate (voluntary with agreement from buyer)
B2C e-invoicing mandate
No mandate (voluntary)
National Invoicing platform
Tax Invoice content requirements
Integrity and authenticity
Required – through business controls
Any (but VAT must be shown in GBP)
No explicit requirements
6 years after end of accounting year
Allowed (mutual assistance/data protection requirements)
No explicit requirements
Pre-completed VAT return
VAT return submission
Via API using Making Tax Digital compatible software
At Avalara, we make e-invoicing compliance simple. The Avalara e-Invoicing solution is designed to comply with regulations in over 60 countries and we’ve got the future covered, too. This cloud-based solution is flexible, scalable and allows you to quickly respond to new requirements as well as adopting e-invoicing to realise process efficiencies.
Our recent webinar European e-invoicing update: What’s new and what’s next” is also available to view on demand for free by registering HERE.
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