E-invoicing should be voluntary not mandatory

That’s according to the Institute’s Northern Ireland Tax Committee chaired by Janette Burns. The Committee responded last week to the UK Government’s consultation ‘Electronic invoicing: promoting e-invoicing across UK businesses and the public sector’. A series of recommendations featured in the submission including the need to ensure that businesses in Northern Ireland (NI) are not subject to different standards compared to the rest of the UK.

Any UK e-invoicing regime should be decentralised and should also be aligned with what is ultimately agreed at EU-level in respect of the Digital Reporting Requirement (DRR) aspect of the VAT in the Digital Age (ViDA) package. The submission also considers the impact on smaller businesses and recommends that grants/tax incentives be introduced to encourage and help fund voluntary uptake.

In summary, the key recommendations are as follows:

• An appropriate lead-in time and extensive testing by and consultation with various stakeholders will be essential in order to successfully implement a UK wide e-invoicing policy,
• This should begin by encouraging a voluntary approach, in particular for small and micro businesses, by educating taxpayers on the advantages cited in the consultation and by providing grant incentives/tax reliefs to encourage and help fund uptake,
• Mandatory e-invoicing and real-time reporting should only be introduced in a phased format based on the size of the business,
• The Government should establish a dedicated e-invoicing support team,
• A review should be undertaken of the UK’s VAT regime to identify opportunities for simplification ahead of introducing any e-invoicing policy in the UK,
• Any UK wide e-invoicing system will need to consider the potential impact in the NI context in order to avoid adding further complexity or different standards for different regions within the UK,
• The UK’s e-invoicing regime should be decentralised and should be aligned with what is ultimately agreed at EU-level in respect of the DRR aspect of ViDA, and
• Continued open, transparent and broad consultation will be needed with stakeholders to resolve and identify challenges/issues on the journey to a UK wide e-invoicing policy.