For the first time businesses in the UK are being invited to have their say on the government’s electronic invoicing proposals.
E-invoicing is the digital exchange of invoice information directly between buyers and suppliers, with the potential toget their tax right first time, reduce invoicing and data errors, improve the accuracy of VAT returns, help close the tax gap and save time and money. It usually results in faster business to business payments, leading to improved cash flow and less paperwork.
This will help cut down time and resources businesses spend managing their tax affairs so they can be more productive. It forms part of the Prime Minister’s Plan for Change for a tax system that supports economic growth.
E-invoicing has improved cash flow for a UK NHS trust, where e-invoices are ready for processing within 24 hours, compared to 10 days under paper invoicing. Their e-invoices are typically paid almost twice as quickly than paper invoices, with supplier queries reduced by an average of 15%.
Xero sees e-invoicing as the next digital revolution for small firms, simplifying how businesses invoice customers and get paid faster. Firms will save money on chasing payments, improve cash flow and reduce fraud risks.
James Murray, Exchequer Secretary to the Treasury said: “We have begun our work to transform the UK’s tax system into one that is focused on helping businesses and the economy to grow.
“E-invoicing simplifies processes, reduces errors and helps businesses to get paid faster. By cutting paperwork and freeing up valuable time and money, it will help improve firms’ productivity and their ability to grow and succeed.”
Gareth Thomas, Minister for Services, Small Business and Exports, said: “Small businesses are at the heart of our economy and vital to our growth mission. The potential of digitising taxes, speeding up payments and streamlining administrative tasks will provide real benefits to the economy, supporting smaller firms and boosting growth.
“This is why we want to make sure e-invoicing works for SMEs, because cash flow can make all the difference between staying afloat or going under.”
The consultation applies to business invoicing. It will gather views on standardising e-invoicing and how to increase its adoption across UK businesses and the public sector. It also explores how different e-invoicing models could align a business with their customers’ businesses. People can take part whether or not they currently use e-invoicing.
HMRC and the DBT want to hear the opinions of self-employed people, businesses of all sizes, representative and industry bodies, charities and public sector organisations.
