Proposal for mandatory settlement of VAT and PAYE liabilities by direct debit -LITRG response to consultation
LITRG have responded to the government’s recent consultation on mandatory payment of VAT and PAYE liabilities by direct debit.
We do not support the government’s proposal to make it compulsory for everyone to settle their VAT and/or PAYE bills by direct debit. Our view is that a voluntary payment method that taxpayers actively choose is likely to command greater trust, achieve better compliance and require fewer safeguards than one that is imposed.
The proposed change would affect around 2.4 million businesses and employers (87% of the 2.73 million businesses registered for VAT and PAYE) who are not currently paying by direct debit. As most taxpayers are not actively choosing direct debit at the moment, HMRC should first identify and consider the reasons why this is the case. Flexibility over payment methods is particularly important for small and micro businesses and employers as they potentially have the least administrative capacity and the greatest cashflow pressures.
We also highlight issues for two particular groups in our response, those who are voluntarily registered for VAT and individual employers (such as care and support employers.)
You can read LITRG’s full submission using the link provided. A link is also given to the original consultation on GOV.UK.