Electronic or paper invoices?

March 12th 2024

You have recently switched to electronic invoicing. However, some customers are insisting on paper invoices. Must you comply with these requests?  Elaine Wight answers this question below.

While the design and layout of your business invoices is up to you, there are government regulations that require you to include certain information about your business and the goods or services you sell. If you are registered for VAT, you are required to include even more information on your invoices.

Electronic or paper?
For most businesses there are financial advantages to sending electronic invoices compared with paper versions, e.g. no envelopes, print and postage costs. Further advantages include the facility to link electronic invoicing with your bookkeeping software so that details of your sales can be transferred to your bookkeeping software automatically, so it’s quicker and more accurate compared with manual invoices.

Many small businesses and private customers prefer to receive paper invoices and may request them instead of electronic. Customers can ask but cannot insist on the format in which you send them. The choice of format is entirely up to you.

If a customer complains about receiving electronic invoices, you should point them towards HMRC’s guidance on the topic.

One or the other
Issuing both paper and electronic invoices for HMRC’s guidance on invoicing says that there is no problem issuing both electronic and paper invoices for a “controlled trial of electronic invoicing systems”. But the dual invoicing must stop at the end of the trial.

Where you’ve fully switched to electronic invoicing you can, in addition, provide a customer with a paper document showing all the invoice details but it should also clearly state: “this is not a VAT invoice”.

Making the change
Many bookkeeping software applications include integrated electronic invoicing facilities, or they can be added for an extra cost. You’re not required to notify HMRC or anyone else that you intend to switch from paper to electronic invoicing or vice versa. However, when you’ve made the change you must be able to prove to HMRC that your system is reliable and provides an electronic audit trail between your invoices and your VAT returns.

It’s entirely up to you what format you use for sending invoices. Customers can make requests but cannot insist on the format of invoice they receive from you. You must use either electronic or paper invoices; you can’t mix and match or issue both.

For further detail and assistance with this or similar scenarios please feel free to contact the JRW Hogg & Thorburn team.