VAT-Registered Businesses May Need A New Direct Debit

More than 150,000 VAT-registered businesses have received letters from HMRC explaining that they may need to set up a new direct debit to pay any outstanding VAT with ...

This is a direct result of the transfer of VAT records to a new HMRC database called the Enterprise Tax Management Platform, which started in April 2021. This applied to VAT-registered businesses who are not signed up for Making Tax Digital for VAT.

"The letters were issued because HMRC didn't have a valid email address for the business!"

So, these traders can't be moved until July 2021 at the earliest, though to satisfy legal direct debit requirements, an email address will need to be supplied during the sign-up phase. As the transfer progresses, any direct debit not associated with an email address has to be deleted by law.

The new mandate must be set up via the individual's business tax account, which, of course, needs an email address to log in with!

VAT-registered businesses will not know exactly when their records will be transferred, and it could take up to November 2021 to complete the process. It may be worth checking each of your VAT payments have gone through on the existing direct debit and act when one isn't taken.

Deferred VAT direct debits are treated differently and are unaffected. Agents are now not able to set up direct debits for their clients, so if you are a VAT-Registered Business and have received a letter from HMRC, it's something you must action yourself.

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