The government is reaching out to businesses for input on a new approach to electronic invoicing, or e-invoicing, as part of its strategy to boost the UK economy.
They’ve launched a 12-week consultation focusing on various aspects of e-invoicing, like different models, whether it should be mandatory or voluntary, and the potential for real-time digital reporting. This initiative aligns with the government’s mission to kickstart economic growth, supported by HMRC and the Department for Business and Trade. The aim is to enhance tax collection and streamline business operations.
In their announcement, the government stated that they want to hear opinions on how to standardize e-invoicing and promote its uptake among UK businesses and the public sector. They’re particularly interested in feedback from businesses already using e-invoicing, as well as those not yet on board.
The government believes that adopting e-invoicing technology can help businesses avoid tax errors, enhance the accuracy of VAT returns, close the tax gap, and ultimately save time and money. They noted that e-invoicing can accelerate payments between businesses, improve cash flow, and reduce paperwork.
DBT minister Gareth Thomas emphasized the importance of small businesses in the economy. He highlighted that digitizing taxes and streamlining administrative processes can provide real support to smaller firms. He stressed that cash flow can be crucial for business survival.
The government cited successful examples of e-invoicing from various sectors. For instance, an unnamed NHS trust cut its invoice processing time from 10 days to just 24 hours and saw a 15% decrease in supplier queries. They also mentioned that in Australia, government agencies are now settling e-invoices in five days compared to 20 days for traditional invoices. Research from the UK accounting software company Sage showed that e-invoicing can lead to 3% productivity gains by streamlining data entry and tax filing.
The consultation, titled “Promoting electronic invoicing across UK businesses and the public sector,” is open until May 7. James Murray, exchequer secretary to the Treasury, stated that e-invoicing simplifies processes, reduces errors, and speeds up payments. He believes that cutting down on paperwork will enhance productivity, enabling businesses to grow.
The government also pointed out that around 130 countries are either implementing or planning to implement e-invoicing systems, detailing required data and its format.