E-Invoicing in the United Kingdom (B2G E-Invoices)

E-invoicing in the United Kingdom was initiated with the Making Tax Digital program in 2019. Currently, only invoices sent to the National Health Service (NHS) must be in electronic format, but as the UK continues to mimic the rules of Directive 2014/55/EU, that is likely to expand to more transactions.

Latest news

In April 2023, entities that make more than £10,000 a year in gross revenue must submit periodic MTD reporting.

Implementation timeline

• 2019: Initiation of the Making Tax Digital (MTD) initiative, and central government entities must be able to process and receive e-invoices.

• 18 April 2020: All local government entities and utilities must be able to process and receive invoices in an electronic format.

• 31 March 2022: All invoices to the National Health Service (NHS) must be submitted in an electronic format.

Digital Reporting Requirements

There is no His Majesty's Revenue and Customs (HMRC) real-time reporting requirement. And unlike some other European countries, the UK does not require the issuance of SAF-T forms.

Real-time reporting is not required by His Majesty's Revenue and Customs (HMRC). For those with a taxable turnover of more than £85,000, the Making Tax Digital (MTD) project introduced an online, digital system for VAT tax reporting. Beginning in April 2023, all companies, non-VAT registered sole proprietors, and landlords who make more than £10,000 a year in gross revenue must submit periodic MTD reporting.

UK e-invoicing regulations

E-invoice components

• Unique identification number

• Date of supply and invoice issuance

• Supplier & customer names, addresses and VAT registration numbers (only required for customers in the case of cross-border transactions)

• Goods or service unit price, quantity, and VAT rate

• Rate of cash discount, if applicable

• Total VAT owed in GBP

Issuance timeline

An e-invoice must be issued within 30 days from the time of supply or within 30 days of the time of payment if it occurs before the supply. Receivers are then required to acknowledge when they have received the invoice.

Legislation

Despite the UK leaving the EU through Brexit, they decided to continue to enact Directive 2014/55/EU for ease of cross-border trade.

Format

The format used for e-invoicing must be one that is compatible with EN 16931. Since there is no requirement, they may be issued in PDF or XML with any e-invoice standard.

Language

E-invoices do not have to be in English, but if requested to provide e-invoice information, an English translation must be acquired within 30 days.

Validation

In order to assure the integrity and authenticity of invoice information, suppliers may use any method ranging from credible audit trails to Advanced Electronic Signatures.

Storage

The e-invoice must be stored by issuers and receivers for at least six years after the end of the accounting year. If stored outside of the UK, the HRMC recommends that users maintain online access to records.

B2B e-invoicing in the UK

Despite there being no B2B e-invoicing mandate, the UK has some requirements for those who choose to e-invoice. The issuer must create a formal agreement with the client to have proof of e-invoice acceptance. They are also tasked with ensuring the authenticity of an e-invoice. They can choose from a variety of methods, such as Advanced Electronic Signatures and Qualified Electronic Signatures. If the issuer provides the e-invoice in a machine-readable format, they are required to also provide a copy that's human-readable. Although mandatory e-invoicing rules do not extend to these transactions yet, it is likely that the scope of the legislation will expand in the future.

B2G e-invoicing in the UK

E-invoicing for B2G transactions is only required for sending invoices to the National Health Service (NHS). Although there is no general mandate, public entities are still required to be able to receive and process e-invoices. E-invoices sent to the NHS Shared Business Services are conducted through the Tradeshift e-invoicing platform. It has Electronic Data Integration (EDI) capabilities, which allow for integration with invoicing software such as DDD Invoices. The UK, like many other European nations, has turned to the Peppol network to facilitate this transition for public procurement of the NHS. Suppliers must be connected to Peppol Access Points and have a valid GLN and GTIN code in order to identify the products sent through the network.

3 Ways to send electronic invoices in the UK

1. Using a service provider

Third-party providers based on a "3-corner" model that follow the requirements set by the UK government, such as DDD invoices, can be used.

2. Direct integration with the supplier's IT system

This method is typically used by larger enterprises that have the appropriate in-house infrastructure and budget to integrate directly.

3. Peppol Access Point

Entities participating in B2G transactions with the NHS are mandated to use Peppol to process, receive, and send e-invoices.

Peppol network

Peppol (Pan-European Public Procurement Online) serves as a network framework that streamlines the electronic exchange of documents, mainly focusing on e-invoicing, connecting businesses and government bodies. It functions based on established standardized specifications and protocols, ensuring smooth and secure interaction among participants via a 4-corner model.

Businesses are able to connect to it through Peppol Access Points (AP), such as DDD Invoices. A certified AP simplifies sending e-invoices between organizations by acting as a bridge between different systems. It converts the sender's e-invoice into a Peppol BIS billing 3.0 format that the recipient's system can interpret and facilitates B2G e-invoicing in the UK.

Making Tax Digital (MTD)

The 'Making Tax Digital' (MTD) initiative requires that entities mandated to conduct electronic invoicing submit VAT returns to the HRMS and keep all of their records secure since 1 April 2022. Reporting to the HRMC is done through MTD-compatible software on a quarterly basis.

DDD Invoices: a certified Peppol Access Point and e-invoicing solution

Want to connect to Peppol but don't know how? Here are the benefits of choosing DDD Invoices as your Peppol Access Point:

• Unlock the ability to send and receive e-documents worldwide, without worrying about local compliance issues. Through our API, we automatically fill in your invoice data and send the invoice to the proper authorities, letting you focus on your core business processes and we manage the bureaucracy.

• Seamlessly integrate into your current invoicing system, ERP or CRM in as little as one day. Enjoy an error-free and automated invoicing process through our secure and reliable service.

FAQs about e-invoicing in the United Kingdom