The Government has launched a consultation on electronic invoicing, inviting views on standardising e-invoicing and how to increase its adoption in both the public and private sectors.

According to the consultation, e-invoicing brings a range of advantages to businesses: improving productivity; reducing errors in tax returns; removing administrative burdens; improving an organisation’s carbon footprint; reducing costs by up to 80%; and reducing the risk of fraud and breaches of security.

Despite these advantages, the uptake of e-invoicing in the UK is low, and the Government is seeking views on what can be done to change this.

The consultation explains that one area in particular that will ensure that the benefits of e-invoicing are realised is to introduce appropriate standards. At present, apart from requirements set by NHS England for its suppliers, the UK has no mandated standards for e-invoicing.

According to the consultation, standards are essential to ensure that systems are interoperable, thereby improving efficiency and supporting international trade. It therefore invites views on whether the adoption of a UK single shared standard would encourage businesses to take up e-invoicing and, if so, what such a standard might look like.

The consultation also considers various models of e-invoicing, drawing upon the experiences of systems in other countries. It points to voluntary models of e-invoicing for business-to-business transactions such as in Singapore, or mandated models, as adopted in a number of EU member states.

The mandated model emerges as a more likely contender, but the consultation invites views on what that mandate might look like. For example, it could require that e-invoices are issued for all business-to-business supplies or for all business-to-government supplies. Equally, it could require all businesses over a certain size to be able to both receive and issue e-invoices, or just to be able to receive them. The consultation also asks businesses how long they will likely need to implement e-invoicing into their operations should a mandate be introduced.

Finally, the consultation seeks views on whether a model of e-invoicing should be ‘centralised’ or ‘decentralised’. Under a centralised model, e-invoices are submitted to a tax authority before they are issued to the buyer, whereas a decentralised model involves businesses submitting their invoices directly to their customers through their software providers. The Government sets out that its preference is a decentralised model since it can “further build on the business and tax benefits observed in the digitalisation of business records” and it also provides “greater flexibility to businesses to choose a platform and supplier that fits within their business needs”.

The consultation is open until 7 May and can be read in full here.