VAT News

HMRC Processes on Direct Debit Payments to change – Action Required


A note from HMRC in their recent Agents Update caught the eye and we thought it useful to share. With any move to a new IT system, issues will arise at a practical level and this matter relates to Direct Debit details on the taxpayers account through which payments for the VAT Return liability would be taken. It will be important for clients and indeed Agents, acting for their clients in the submission of their VAT Returns, to keep an eye on the details held on their VAT accounts in respect of Direct Debit details. It would be an added stress at this time, we feel, for businesses to inadvertently find that their VAT liability payment has not been taken as a result of these changes – especially caused by HMRC system changes.

HMRC have advised and we have added highlights to the relevant points of interest:

“There has been a change of plan in the way we will implement this transition. UK Banking Regulations require us to inform customers paying by direct debit of the amount and date their direct debit will be taken.

Due to the very short timeframe between submission of the VAT return and payment of the tax, we are unable to send postal notifications to customers. Instead, we will have to use customers’ email addresses to inform them.

We will need to cancel the direct debits of all customers for whom we do not hold an email address prior to moving them to the new system. We will notify all affected customers about this in a letter we plan to send out by May 2021. We intend to start moving these accounts in July 2021 and hope to finish the work by September 2021.  

The letter will encourage affected customers to regularly log in to their Business Tax Account between July 2021 and September 2021. Once an account has been moved, the customer’s Business Tax Account will automatically prompt them to set up a new direct debit and provide a contact email address when they next login.

If new direct debits are not set up customers will be required to pay their VAT via an alternative method.”

The particular point for Agents to note is that HMRC are unable to advise agents exactly when their clients’ accounts will be migrated to the new IT platform.

Their advice for Agents is that:

“When submitting returns on behalf of their clients’ agents will sign into the ‘old’ agent portal as normal. If the obligation to file their VAT return is there, the return can be submitted.

If the obligation is not there, the client’s VAT record has been migrated. The agent should login to their Agent Services Account (ASA) and submit the VAT return using the non-MTD filing service within ASA.”


For the avoidance of doubt, the content recorded in this news article does not constitute formal advice and we do not guarantee the accuracy of any information provided at the time of reading. It is always recommended that you seek professional advice before acting on any of the news articles or information included.

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