The digitisation of business processes in the UK includes electronic invoicing as part of efforts to modernise trade and combat tax fraud. In this context, it's important to understand the UK's approach to electronic invoicing. This article explains the key points of the UK system, which differs significantly from the French PDP model.
Unlike France's PDP system, the UK does not currently mandate the use of specific dematerialisation platforms for most businesses. The UK approach to electronic invoicing is generally less centralised, with different requirements:
- **Making Tax Digital (MTD)**: This is the UK's digital tax initiative requiring VAT-registered businesses to keep digital records and submit VAT returns using MTD-compatible software.
- **Electronic invoicing is permitted** but not yet mandatory for most private sector businesses (B2B).
- **B2G invoicing**: Electronic invoicing is mandatory for central government suppliers through platforms like PEPPOL.
The UK accepts various electronic formats for invoices:
- **PDF**: Widely used and accepted for electronic invoices
- **PEPPOL BIS Billing 3.0**: A standard format particularly used for public sector procurement
- **UBL (Universal Business Language)**: Standardised XML format for international exchanges
- **Other structured formats**: Including XML, EDI, CSV depending on the business context
These formats allow for varying levels of automation while ensuring compliance with UK tax regulations.
- **VAT-registered businesses**: Must comply with Making Tax Digital rules for keeping digital records
- **Government suppliers**: Must use electronic invoicing when working with central government entities
- **NHS suppliers**: Electronic invoicing is being increasingly adopted across NHS organisations
1. **Choose compatible software**
- Select MTD-compatible accounting software that supports electronic invoice creation and processing
- Ensure it meets HMRC's requirements for digital record-keeping
2. **Connect your management system**
- Integrate your chosen solution with your business systems
- Set up processes for creating, sending, and receiving electronic invoices
- Configure appropriate data validation checks
3. **Leverage additional services**
- Structured data extraction for automation
- Secure archiving (UK requires retention for at least 6 years)
- Invoice workflow management
- Reporting capabilities
- **Efficiency**: Reduced manual processing and faster payment cycles
- **Cost savings**: Lower processing costs compared to paper invoices
- **Compliance**: Easier adherence to MTD requirements
- **Environmental impact**: Reduced paper usage and carbon footprint
- **Data accuracy**: Fewer errors through automation of data entry
- **Better visibility**: Improved tracking of financial obligations
While there is no mandatory timeline for private sector businesses to adopt electronic invoicing like in France, businesses should be aware of:
- **MTD for VAT**: Already in effect for VAT-registered businesses
- **MTD for Income Tax Self-Assessment (ITSA)**: Phased introduction for self-employed businesses and landlords beginning April 2026
- **Future developments**: The UK government continues to evaluate potential moves toward mandatory e-invoicing, following global trends
While the UK doesn't currently have a PDP system equivalent to France's planned model, electronic invoicing is an increasingly important part of the UK business landscape, particularly through the MTD initiative. By adopting electronic invoicing solutions now, UK businesses can improve efficiency, ensure compliance with existing regulations, and prepare for potential future developments in this area.
Businesses operating in both the UK and France should be aware of the significant differences in requirements and implementation timelines between these markets.
