Direct Debit Debt Directive

14 July 2015

HMRC has just announced plans to put all taxpayers who are taking advantage of the Time To Pay (TTP) facility onto direct debit.

The plans come into force on 3 August 2015 and will apply to all TTP agreements entered into from that date. HMRC has said that it will not revisit existing arrangements, although it will be happy for any taxpayer to move to a direct debit basis of payment.

HMRC says that a direct debit arrangement gives the advantages of cost-effectiveness, security, more likelihood of correct allocation, reduction in contact between HMRC & the taxpayer, and less opportunity for the taxpayer to overlook payment. All of this and the standard direct debit scheme guarantee.  Only in exceptional circumstances will taxpayers be able to opt for another payment method when agreeing TTP arrangements.

This follows on from the announcement in last week’s Budget of the intention to allow HMRC direct access to tax defaulters’ bank accounts. Clearly, as well as seeking to assess more tax, HMRC is trying to ensure that it is collected.

I’m not sure why I feel slightly uneasy about this, as there are quite few suppliers who do have access to my bank account via direct debit and, on balance, I probably have a bit more trust in HMRC than I do the large utility companies. Of course most of us have little say in when taxes are paid and those on PAYE have tax taken from them before it even gets to their bank accounts!

It’s only in disputed cases where this is likely to get contentious and at least there is some measure of control over a direct debit – it can be cancelled. The direct access to bank account legislation still has some parliamentary hoops to jump through and it will be interesting to see how the libertarians in parliament vote on this.

If you have trouble meeting a significant tax debt and would like some impartial advice on your position, please contact your usual UHY adviser or a tax adviser at your nearest location.  Alternatively, you can complete our online contact form.