HMRC to cancel direct debits where no email address on file

What is the impact of this?

This could lead to penalties where businesses believe they are set up to pay by direct debit but this has been cancelled, meaning the VAT liability payment is late.

Why are HMRC doing this?

This is to ensure that HMRC is compliant with the current UK banking regulations, which require HMRC to hold email addresses for any businesses paying by direct debit. This allows the taxpayer to be informed in advance of any direct debit payment being withdrawn.

When will the direct debits be cancelled?

Businesses with no email address on file will have their direct debits cancelled between July – November 2021. For businesses who are not registered for Making Tax Digital, the cancellation will occur when the business’ VAT record is transferred to HMRC’s new IT system.

What should you do?

Businesses that are affected by this change will need to set up a new direct debit and provide a valid email address, which can be done through the business tax account.

Please note, this cancellation will not affect any payments made through the online payment scheme for VAT that was deferred in 2020.

Should you wish to discuss this in more detail, please contact Robert Marchant, Robert Warne or your usual Crowe VAT contact.