Starting 3rd August 2015, any taxpayer that has agreed payment of a debt to HMRC in monthly instalments will be required to make these payments by Direct Debit. HMRC only permit the payment of debts of this nature to be paid over time if the taxpayer has, in their eyes, legitimate reason for being unable to pay by the previously specified due date and if payment terms are agreed for any outstanding tax liability. HMRC have long preferred Direct Debit as a method of payment but from August its use will be mandatory bar exceptional circumstances where other methods of payment can be agreed.

The use of Direct Debit includes a guarantee to protect the taxpayer and will ensure that payments are made more securely, also eliminating the risk of the taxpayer forgetting to make the payment while making the payments easier to allocate. If any of your clients are unable to pay their VAT liabilities by the required date and intend to request time to pay, they need to be aware that they will be required to set up a direct debit and should therefore collate the necessary bank details ready to do so.