E-invoicing is the exchange of invoice documents between a supplier and a customer in a structured digital format. Unlike traditional paper invoices or PDF documents sent by email, e-invoices are generated, transmitted and received in a standardised electronic format that allows for automated processing.  

The advantages of e-invoicing 

The government believes that widespread adoption of e-invoicing could have a number of benefits, including: 

• Cutting businesses’ costs. The government believes that e-invoicing streamlines invoicing processes, potentially reducing invoicing costs by 60-80% according to industry estimates.
• Improving businesses’ cashflow. Government research suggests that late payments act as a constraint on businesses, particularly small and medium-sized businesses. E-invoicing could reduce the time taken for bills to be paid. 
• Reducing errors. The government says that manually entering supplier invoice data has an average error rate of approximately 10%. 
• Helping to prevent fraud. Using a secure, digital data exchange reduces the risk of invoices being intercepted and tampered with.
• Streamlining tax reporting. E-invoicing could automate parts of tax reporting for businesses, reducing time and resources spent on inputting data, and allowing HMRC to further modernise its processes and more accurately target its compliance activity.   

The consultation 

Topics explored in the consultation include: 

• Different models of e-invoicing. With a centralised model, e-invoices are submitted to the tax authority before being issued to the buyer, whereas in a decentralised model, businesses submit their invoices through their software providers directly to their customers. The government’s preference is for a decentralised model.
• Whether to take a mandated or voluntary approach to e-invoicing. The government says that, under the current voluntary system, businesses do not know if their supplier will provide e-invoices or their customers will accept them, creating the potential for having to run dual systems. The network effect created by a mandate could maximise the potential benefits of e-invoicing.
• What scope of mandate might be most appropriate in the UK and for businesses. Drawing on experiences from other countries, the government could require that e-invoices are used for all business to business, or business to government supplies, or that all businesses over a certain size adopt e-invoicing.   
• Whether e-invoicing should be complemented by real time digital reporting. Both centralised and decentralised models offer the opportunity for real or near real-time reporting of transactional data to the tax authority. 

The consultation will close on 7 May 2025. Please send any comments to ed.saltmarsh@icaew.com.  

The government says that there “will be no immediate change in response to this consultation” and that the responses “will be used to inform future decision-making”. 

ICAEW’s view 

Ed Saltmarsh, Technical Manager, VAT and Customs, said: “We are pleased that the government has initiated a consultation on e-invoicing. As well as providing a significant opportunity to reduce the tax gap, there are clear long-term benefits of e-invoicing for businesses, including reduced administrative costs and improved cash flow.” 

“However, implementing e-invoicing can involve a substantial investment in time and money, particularly for SMEs. That’s why we’re encouraged by the government’s approach to addressing these challenges through consultation.” 

“We look forward to collaborating with the government throughout this consultation process and strongly encourage businesses to participate and share their insights.” 

Further information 

• Consultation: E-invoicing - promoting e-invoicing across UK businesses and the public sector
• Government press release
• Learn more about e-invoicing from ICAEW’s economy explainer.