E-Invoicing in the United Kingdom
The new e-invoicing law in the UK makes it mandatory for public sector companies to process invoices from suppliers electronically. With the new statute, the UK Government’s “Public Procurement (Electronic Invoices etc.) Regulations 2019” make e-invoicing mandatory in the public sector.
While the requirements for central governments were already enforced in 2019, local governments wouldn’t have to switch to e-invoicing until April 18, 2020.
Contracting authorities must stipulate in contracts that they are obliged to accept and process invoices that meet the technical standard for electronic invoicing.
The directive aims to regulate the use of different electronic invoice formats in the member states by introducing a standard to avoid complexity and additional costs.
Especially in challenging times like these, when we’re depending on stable supply chains more than ever, the UK e-invoicing legislation is an important first step towards strengthening communication between suppliers and buyers.
BREAKING NEWS: Changes in value added tax and customs 2022
In 2022, the trend of very dynamic developments in the area of taxes and customs will continue. Above all, the global pandemic and also the United Kingdom’s exit from the EU are contributing to the fast-moving changes. Therefore, it is already important for companies to prepare for the upcoming new regulations.
Folgende neue Regelungen gelten im Jahr 2022:
- End of payment relief due to the Corona pandemic
- Interest and/or penalties may apply for unpaid contributions
1. January 2022
- Introduction of full customs declarations and controls
- Abolition of Intrastat declarations for most UK companies
1. April 2022
- The reduced rate for leisure and hospitality reverts to the standard rate
- Introduction of a tax on plastic packaging
- Introduction of a new regime for late VAT payments and late filing of VAT returns
- Obligation to notify uncertain tax treatments
30. June 2022
- Submission of late reports from 2021
1. July 2022
- Introduction of customs certification and physical checks in certain areas
1. September 2022
- Customs certification and physical inspection for all dairy products
1. November 2022
- Customs certification and physical inspection for all remaining regulated products of animal origin
Making Tax Digital (MTD) in the United Kingdom
A new e-invoicing law requires companies in the UK to issue and save invoices electronically. Therefore, the local government wants to switch to e-invoicing by April 2020 under the principle of MTD “Making Tax Digital”. This procedure is intended to regulate the use of different electronic invoice formats in the member states by introducing a standard. This avoids complexity and additional costs.
Advantages of MTD:
In addition, MTD offers further advantages over conventional paper invoices:
- structured data for testing
- improved order tracking
- less reliance on paper, which reduces storage and processing costs
- quick access and retrieval
- improved cash flow
- security and easier dispute resolution
- strengthening communication between suppliers and buyers
These regulations must be observed:
Businesses with sales taxable above the sales tax threshold (£ 85,000) must follow the MTD rules for sales tax reporting by April 1, 2020. Companies that are below the threshold can voluntarily apply MTD earlier.
From April 1, 2022, all companies subject to VAT, regardless of their annual turnover, will have to comply with the MTD regulations and create their invoices digitally.
The primary legislation for the digitization of VAT and income tax is contained in the Finance Act (No. 2) 2017. This creates certainty about how MTD should work.
The secondary legislation for VAT was established in February 2018. This came into force in April 2019.
In addition, a sales tax return was published in which the rules for digitizing taxes, sales tax, and digital information are explained.
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