Electronic invoicing in United Kingdom

Peppol e-invoicing is not a standard use in the UK.
Tax Authority
In the United Kingdom, the tax authority is known as Her Majesty's Revenue and Customs (HMRC). HMRC is responsible for administering and collecting taxes in the UK, including income taxes, property taxes, capital gains taxes, UK inheritance taxes, and Value Added Tax (VAT). According to a report, tax receipts for the UK totaled approximately £714.8 billion in 2021/21, which represents an increase of 22.4% from the previous tax year. The majority of UK taxpayers settle their tax liability entirely through tax withheld at source on earnings and savings and do not need to make any further declarations, under the self-assessment (SA) tax system. The central government revenues come primarily from income tax, National Insurance contributions, value-added tax, corporation tax, and fuel duty.
Invoice Obligation
In the United Kingdom, there is no explicit mandate for electronic invoicing (e-invoicing) for businesses, but 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 business controls are usually accepted. The UK government has implemented the EU directive on e-invoicing for public procurement, which requires anyone involved in public tender procedures to receive and process supplier invoices that follow an e-invoicing standard established under the directive. Regarding the inclusion of a payment due date on the invoice, it is not mandatory in the UK, but it is considered a good practice to include one. If no payment due date is specified, the customer must pay within 30 days from the invoice issue date. The invoice does not have to be in the English language. It is worth noting that while e-invoicing is not currently mandatory for businesses in the UK, other countries have implemented e-invoicing mandates. For example, government agencies in the UK have been required to receive e-invoices since April 2019, and in 2023, all taxpayers and large companies in the UK should be able to issue and receive e-invoices.
Operating Model
In the United Kingdom, there is no explicitly mandated format for e-invoices, but businesses are required to ensure the authenticity of the issuer and the integrity of the contents of the e-invoice. There is no prescribed method to do this, and general businesses controls are usually accepted. However, public sector companies are required to process invoices from suppliers electronically, according to the "Public Procurement (Electronic Invoices etc.) Regulations 2019." E-invoicing involves creating and sending digital invoices in a structured format that enables automated invoice processing. E-invoices can be automatically generated and processed by accounting software or ERP solutions, providing benefits such as reduced manual effort, fewer errors, faster invoice processing, and improved cash flow. E-invoices must be sent via the Chorus Pro platform, which also allows cross-border receiving and processing of e-invoices from non-domestic suppliers (thanks to its connection to PEPPOL) and allows archiving of the e-invoices processed via the platform. Additionally, the 2015 Small Business, Enterprise and Employment Act grants powers to Ministers to regulate the use of electronic invoicing (eInvoicing) in the field of public procurement in England.
Required Taxpayers
In the United Kingdom, there is no mandate for B2B or B2G e-invoicing except for invoicing the National Health Service (NHS). However, as part of the VAT system, there are formal legal requirements related to the issuing, receiving, and storing of e-invoices that businesses need to adhere to. The Making Tax Digital (MTD) law requires companies in the UK to issue and save invoices electronically. The local government has mandated e-invoicing under the MTD principle, and the procedure is intended to regulate the use of different electronic invoicing formats. Additionally, all resident taxpayers must use XML version 3.0 in their online invoicing reports from January 1, 2021. Therefore, it can be concluded that electronic invoicing is not mandatory for all taxpayers in the UK, but businesses issuing invoices to the National Health Service (NHS) and those subject to the Making Tax Digital (MTD) law are required to issue and save invoices electronically.
Normativity
In the United Kingdom, there is no general e-invoicing mandate, and a supplier must always receive the customer's agreement and acceptance to receive e-invoices. However, public sector companies are required to process invoices from suppliers electronically, as per the Public Procurement (Electronic Invoices etc.) Regulations 2019. There is no explicitly mandated format for an e-invoice in the UK, but businesses are required to ensure the authenticity of the issuer and the integrity of the contents of the e-invoice. The 2015 Small Business, Enterprise and Employment Act grants powers to Ministers to regulate the use of electronic invoicing in the field of public procurement in England. In terms of public contracting authorities, like local authorities and central government, it is suggested that they follow the EU directive on e-invoicing for public procurement via Public Procurement (Electronic Invoices, etc.) Regulations 2019. It is important to note that as of September 2021, there is an obligation to send e-reporting information on Business to Consumer (B2C) sales, international B2B sales, Intra-EU supply information, and payment information for invoices or sales where the tax point date is on payment. There are also specific requirements for cryptographic stamps and QR codes on e-invoices and e-notes in the UK. For businesses in the UK, when issuing an invoice, it is necessary to include the business name and address, client name and address, project address (if different from usual business address), invoice number, invoice date, payment terms, and due date, as well as a description of services rendered or products delivered.
Type of documents
There is no explicitly mandated format for an e-invoice in the United Kingdom. However, businesses are required to ensure the authenticity of the issuer and the integrity of the contents of the e-invoice. While there is no prescribed method to achieve this, general business controls are usually accepted. Additionally, the 2015 Small Business, Enterprise and Employment Act grants powers to Ministers to regulate the use of electronic invoicing (eInvoicing) in the field of public procurement in England. However, this does not apply to Northern Ireland, Scotland, or Wales, which set their own regulations. It is recommended that all public contracting authorities like local authorities, central government, and others follow certain guidelines, such as ensuring a unique identification number, including the company name and address of the customer being invoiced, the date the goods or service were provided, the invoicing company's name, address, and contact information, and the amount(s) being charged. In summary, while there is no specific format mandated for e-invoicing in the United Kingdom, businesses are required to ensure the authenticity and integrity of the invoice's contents, and certain guidelines should be followed to ensure consistency across public contracting authorities.
Peppol Standard
According to the information provided in the web search results, the use of Peppol e-invoicing is mandated for NHS Trusts and their suppliers in England through conditions of contract, using the Peppol standards for electronic purchase order and invoice messages exchanged through Peppol Access Points. However, there is no e-invoicing legislation or regulation in the UK, and businesses are not required to use Peppol specifically. Instead, they are required to ensure the authenticity of the issuer and the integrity of the contents of the e-invoice using general business controls. Peppol is a way to send invoices to customers in the public sector and an international network that allows companies to exchange business-critical electronic documents. The Peppol standard is used for electronic purchase order and invoice messages and is mandatory for NHS Trusts and their suppliers in England. Microsoft Dynamics 365 for Finance and Operations has incorporated Peppol BIS 3, and it can be used to import supplier invoices from the electronic format. Although Peppol used to be available only in Europe, it is now used all over the world. Therefore, while Peppol e-invoicing is not a standard use in the UK, it is a mandatory requirement for NHS Trusts and their suppliers, and it is available and widely used in the UK and many other countries globally.
Standard Format
There is no explicitly mandated format for an e-invoice in the United Kingdom. However, businesses are required to ensure the authenticity of the issuer and the integrity of the contents of the e-invoice. While there is no prescribed method to do this, general business controls are usually accepted. The UK government does support the use of electronic data interchange (EDI) within a network for the supply and validation of eInvoicing. Additionally, the HMRC adopted the eInvoicing standard (EN16931) prepared by the European Committee for Standardisation (CEN). It is important to note that while there is no specific format mandated, a standard invoice in the United Kingdom should include a unique identification number, the company name and address of the customer being invoiced, the date the goods or service were provided (supply date), the invoicing company's name, address, and contact information, and the amount(s) being charged.
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