Today, Europe’s eyes are turned towards the United Kingdom and its final decision regarding the Brexit impasse, which will definitely affect thousands of entrepreneurs doing business on British territory. Many of them, involved in public tender procedures, wonder what the procurement process will look like after the United Kingdom leaves the European Union, and whether it will still be possible to bill UK public administration entities via e-invoice. The post-Brexit reality will definitely prove to be a stern test for the British legal system.
For most European states, 18 April 2019 went down as one the most important moments in their electronic invoicing history. The deadline for implementation of Directive 2014/55/EU obliged public administration entities to be prepared to receive and process e-invoices sent by their suppliers in the public procurement processes. With the aim of facilitating e-invoice exchange and making the public procurement process easier for global suppliers, the new EU regulations also affect the United Kingdom.
Despite mandatory e-Invoicing compliance to EN16931 standard, developed by the European Committee for Standardization (CEN), the large variety of possible e-invoice formats remains a major logistical challenge. To simplify adoption of e-invoicing, the UK’s HM Revenue & Customs has prepared guidance indicating all acceptable electronic invoice formats. Other interesting HMRC initiatives include the publication of Electronic invoicing (VAT Notice 700/63) guidance, and the launch, on 1 April 2019, of the Making Tax Digital program, obliging all VAT registered businesses to submit and record all of their accounting records and VAT returns data electronically. Nevertheless, there is no central e-Invoicing platform covering the entire UK territory.
Relevance of local legislation
Although some fundamental rules for all entities entering into contracts with British public authorities have been introduced by The Public Procurement (Electronic Invoices etc.) Regulations 2019, prepared to provide for the implementation of Directive 2014/55/EU, national legislation is not exhaustive in the UK. New, separate legal regulations to ensure appropriate e-Invoicing processing in contacts with public administration have been adopted in different parts of the country, in an attempt to ensure a functional and effective legal framework for public procurement processes. The most relevant territory-limited legislative initiatives are listed below.
England, Wales and Northern Ireland
Pursuant to the provisions of The 2015 Small Business, Enterprise and Employment (SBEE) Act, e-Invoicing has started to be seen as a crucial innovation for the British economy, forcing public entities to implement e-invoicing solutions smoothly and in a timely manner, within the territorial scope of the Act limited exclusively to England.
The most important legal acts applicable to the public procurement processes in England, Wales and Northern Ireland are The Public Contracts Regulations (PCR) 2015, The Utilities Contracts Regulations (UCR) 2016, and The Concession Contracts Regulations (CCR) 2016. In addition, The Defence and Security Public Contracts Regulations (Defence Regulations) 2011 applies to the procurement process rules throughout the United Kingdom.
Scotland makes the most significant departure from legislation for England, Wales and Northern Ireland. On 18 April 2019, The Electronic Invoicing (Public Contracts etc.) Amendment (Scotland) Regulations 2019 came into force, implementing the provisions of Directive 2014/55/EU, laid before the Scottish Parliament three months earlier. Regulations amended earlier legislation (The Public Contracts (Scotland) Regulations 2015, The Utilities Contracts (Scotland) Regulations 2016 and The Concession Contracts (Scotland) Regulations 2016).
The amendments are already applicable to central public administration authorities and entities established by The National Health Service (Scotland) Act 1978. They also set up e-Invoicing requirements as well as components mandatory for e-invoices. Within a year, the new legislation will be extended to other contracting entities. Moreover, The Scottish Government’s eCommerce Shared Service with the e-invoicing platform PECOS P2P (Professional Electronic Commerce Online System) facilitates the adoption of e-invoicing. It is worth noting that the territorial scope of the legislation applies only to Scotland.
What the future holds
The majority of e-Invoicing regulations recently adopted in the United Kingdom in order to implement Directive 2014/55/EU will not change regardless of the Brexit negotiation outcome. Furthermore, until the moment that the UK leaves the European Union, all EC directives will be applicable in the UK. Additionally, measures undertaken in the past few months by the British government in the field of electronic invoicing are intended to enable the smooth transition of public procurement processes to the new post-Brexit reality.
Although the precise shape of the British public procurement process has to be worked out during withdrawal agreement negotiations, sending electronic invoices to British public administration entities will remain possible. This will be of significant benefit for companies, especially large and innovative organizations, which e-Invoice public administration entities, and as such should be considered when shaping corporate business strategy.
For more details, see Comarch e-Invoicing website.