eInvoicing Documentation
eInvoicing in the United Kingdom
Legislation
The 2015 Small Business, Enterprise and Employment Act grants powers to Ministers to regulate the use of electronic invoicing (eInvoicing) in the field of public procurement in England. This does not apply to Northern Ireland, Scotland or Wales, which set their regulations. It is still suggested that all public contracting authorities, such as local authorities, central government and agencies use eInvoicing and many have already done so (the National Health Society started implementing some eInvoicing in 2016).
The below regulations are linked to eProcurement and eInvoicing. The eInvoicing Directive is transposed at the national level.
Official publication: Gibraltar Gazette ; Number: LN. 2018/290 ; Publication date: 2018-12-20 ; Page: 00001-00015
Official publication: Her Majesty's Stationery Office (HMSO) ; Number: 2019(7) ; Publication date: 2019-01-16
The below regulation reports the obligation for the country to implement eInvoicing and exchange EN-compliant eInvoices (at the central and sub-central level from the 18 April 2020).
Official publication: Her Majesty's Stationery Office (HMSO) ; Number: 2019 (624) ; Publication date: 2019-03-20
According to the Electronic Invoicing in Public Procurement note of the Cabinet Office, the eInvoicing Directive will still apply to the UK after Brexit, knowing that the Withdrawal Agreement and a transition period are agreed. The Procurement Policy Note 03/18 (PPN), issued by the Crown Commercial Service (CCS) explains that following the UK’s exit from the European Union, the EU law continues to apply. The Cabinet Office is, therefore, taking the necessary steps to continue to implement the eInvoicing Directive.
eInvoicing platform and eInvoicing management solutions
There is no single or central platform for eInvoicing UK-wide. When adopting eInvoicing, contracting authorities can:
- Use a solution provided by a third-party service provider based on a 'three-corner' model, where contracting authorities and economic operators operate over a common platform, supported as required by interoperability agreements with other service providers;
- Establish an internal system to enable eInvoicing that allows economic operators to submit their eInvoices directly;
- As in the case of the NHS, have the obligation to use Peppol as an example of a 'four-corner' model, where the contracting authorities and economic operators operate from separate platforms or access points, which are then connected.
There are central solutions in Wales and Scotland.
Approach for receiving and processing eInvoices
In the case where eInvoices are processed by third-party service providers, eInvoices are submitted directly to their platforms.
Service provider platforms use the data received from submitted invoices (scanned, or PDF format) to create structured eInvoices before integrating them into contracting authorities' workflows and Enterprise Resource Planning (ERP) systems.
There are different approaches to the adoption of eInvoicing within the UK.
Central Government
For example, the Ministry of Defence and His Majesty's Revenue and Customs (HMRC) use eInvoicing extensively.
HMRC adopted the eInvoicing standard (EN16931) prepared by the European Committee for Standardisation (CEN). HMRC also has very specific guidance around acceptable invoices that can be processed digitally from suppliers. HMRC supports the use of electronic data interchange (EDI) within a network for the supply and validation of eInvoicing. A receiver of eInvoices needs to agree how they will receive the invoices with their suppliers in advance of receipt must ensure that they have all of the Value Added Tax (VAT) relevant information provided and must be able to store any eInvoices received digitally and securely.
UK specific legislation has also driven the adoption for wider industries, creating requirements for businesses and organisations to embrace digital finance management. For example, the latest HMRC initiative ‘Making Tax Digital’ requires that organisations keep all of their records and submit their VAT tax returns digitally to HMRC, making eInvoicing a compliance requirement.
England
Some local authorities have already individually implemented eInvoicing solutions as part of their procurement activities and some have established joint shared-service centres to gain benefits from cooperation (such as cost reduction and faster processing and prompt payment of eInvoices).
Scotland
The Scottish Government is providing a national eInvoicing solution through PECOS P2P which is a core component of its national eCommerce Shared Service. Any Scottish public sector organisation can implement the solution regardless of the "Purchase2Pay" (P2P) or finance system in use. The solution accepts PDF invoices (and other formats) that have been automatically generated and issued by a supplier and transforms these into a XML file. This file is then automatically presented to the invoice matching environment. This generates the processing and payment of the eInvoicing utilising already configured auto-match and invoice management workflow.
The Scottish Government is centrally coordinating the adoption of eInvoicing by Scottish public sector organisations (central and sub-central) and suppliers. The government is working to ensure that all concerned stakeholders understand the requirements of the eInvoicing Directive (2014/55/EU). The Directive covers those contracts that are regulated by the European Public Procurement Directives and advertised in the Official Journal of the European Union (OJEU). The Scottish Government is centrally coordinating the adoption of all suppliers of these contracts as these will deliver the biggest transaction efficiency savings and benefits across the Scottish public sector. As part of the wider stakeholder engagement work outlined above, the Scottish Government has also engaged with business including Scottish Chambers of Commerce and the Federation of Small Businesses.
As part of the implementation plan, the Scottish Government will continue to issue updates to all relevant stakeholders on the progress of the implementation of the Directive via communication channels such as Scottish Procurement Policy Notes (SPPNs), Scottish Procurement twitter account, Scottish Procurement eBulletins, P2P Roadshows and Procurex Scotland.
Wales
Welsh Public Sector organisations have adopted a variety of solutions including Finance/P2P, OCR, outsourced scanning, Smart PDF, EDI, Supplier Portal (back-office integration and PO Flip) and the use of virtual and physical ePayments (Purchasing Card).
An eInvoicing Special Interest Group was created including attendees represented from various sectors. The eProcurement Service (ePS) facilitates the Special Interest Group and hopes that it will help to inform the Welsh Public Sector eInvoicing strategy and development of best practices for the implementation of eInvoicing in Wales (available here).
The electronic capability across Wales varies significantly so each contracting authority will need to undertake their own eInvoicing readiness exercise to establish what is required to ensure compliance with the Directive. If a contracting authority has a P2P system, eInvoicing can be undertaken through that but that will need to be checked and verified in each. Some investment may well be required so eInvoicing needs to be budgeted for and adequately resourced.
If suppliers opt to issue eInvoices based on the European standard i.e. the two syntax formats of UBL and UN/CEFACT (for Wales), they will need to ensure they have the necessary software and systems in place to support it.
The Crown Commercial Service (CCS) has set up a Peppol framework which is available for public bodies in Wales to use. Welsh Government makes available eProcurement tools to public sector organisations in Wales such as eTradingWales (nominated organisations only) and ePayments. Further information can be accessed in the eInvoicing Procurement Advice Note (PAN) for the Public Sector in Wales page and the Procurement Route Planner (PRP) Toolkit via http://prp.gov.wales/toolkit/?lang=en
In the UK, no electronic signature is required for eInvoices and the archiving period amounts to 6 years[1].
eInvoicing implementation in sub-central level contracting authorities
The regulation "The Public Procurement (Electronic Invoices etc.) Regulations 2019" applies to the central government with immediate effect, while local government and utilities have until 18 April 2020 to comply “but may voluntarily do so earlier”.
The EDI, XML and PDF must be accepted by sub-central public entities.
Status on the implementation of the European Standard on eInvoicing (EN)
As long as the relevant invoice messages used contain the required data, accepted is a wide variety of electronic invoice message formats (all being compliant with the European Standard). Examples include:
- traditional EDI standards such as UN/EDIFACT, EANCOM and ODETTE
- XML-based standards
- comma-delimited ASCII, PDF
- UBL and UN/CEFACT
Monitoring eInvoicing implementation
The monitoring strategy in place differs between administrations in the UK, since it is not mandated by the Directive. The Scottish Government is required to actively monitor the progress of public bodies compliance with the Directive[2].
Digital Reporting Requirements (DRR)
There are VAT digital reporting requirements in the United Kingdom (UK). The UK government introduced a program called Making Tax Digital (MTD) in 2019, which requires businesses above the VAT threshold to keep digital records and submit VAT returns using compatible software. Businesses must submit their VAT returns to HMRC using the MTD-compatible software on a quarterly basis[3]. The MTD will be extended to the VAT-registered population, those with turnover below the £85,000 VAT threshold, for their first VAT return period starting on or after 1 April 2022[4]. Starting in April of 2026, small businesses (including individuals who are self-employed and landlords) earning a yearly income exceeding £50,000 must maintain digital records and provide quarterly updates of their income and expenses to HMRC using software that is compatible with MTD. Meanwhile, those earning between £30,000 and £50,000 will need to comply with these requirements starting from April 2027[5].
[1] (Compliance updates – United Kingdom, 2023), [2] (Final business and Regulatory impact assessment, Dereck Makay, 6 November 2019), [3] (Overview of Making Tax Digital, 2022), [4] (Get Ready for Making Tax Digital e-Reporting in the UK, 2023), [5] (How to comply with Making Tax Digital, 2022)
NO VERIFICATION
Last updated: Oct 04, 2023 15:53