Paying VAT by direct debit may be cancelled
Jun 09, 2021
If you pay your VAT bill by direct debit, and HMRC doesn’t hold a valid email address for you, be aware that your existing direct debit will be cancelled.
HMRC is writing to over 150,000 VAT-registered businesses in June to explain that it doesn’t hold an email address for them, and therefore the business will need to take action in order to continue paying their VAT by direct debit.
The reason for this is that HMRC is transferring its VAT records to a new database, and it needs to hold a valid email address for those paying by direct debit in order to satisfy UK banking regulations. HMRC needs to be able to alert you in advance about the amount of VAT that will be debited from your bank account.
Therefore if a VAT record is transferred to the new database and HMRC’s system doesn’t hold a valid email address, any direct debit mandate set up on this record will be automatically cancelled at some point between July and November 2021.
How to carry on paying VAT by direct debit
If you want to carry on paying your VAT by direct debit, you’ll need to set up a new mandate using your business tax account. Once your record has been transferred, you’ll be prompted to set up a new direct debit next time you log in to your business tax account.
If you don’t receive a prompt with on-screen instructions when you log in, then you’ll need to check again at the end of your next VAT period. Any new direct debit must be set up at least 10 days before your next VAT payment is due, if the payments are going to continue uninterrupted.
As accountants we aren’t able to set up a new direct debit on your behalf. It’s your responsibility to make sure you have set up a new direct debit and given HMRC your email address, as if you miss your VAT payment deadline you may be charged a penalty.
If you’ve set up a direct debit mandate to cover the new deferred VAT payment scheme then HMRC has confirmed that it is totally separate, and won’t be affected by these changes.
If you have any questions regarding your VAT payments then do please get in touch – we are always very happy to help.