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HMRC changes for customers who pay VAT by Direct Debit

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This guide explains some changes HMRC are making to their systems which may affect you if you pay your VAT by Direct Debit.


What's changing?

HMRC are currently undergoing work on the transformation of VAT services which will involve migrating customers to a new IT platform. This impacts customers with an existing Direct Debit. 

UK banking regulations require HMRC to hold a valid contact point for customers using Direct Debit. This is so they can notify you in advance when the payment will be taken from your account and the amount. This means any customers who wish to continue paying their VAT by Direct Debit will need to supply their (not their agent’s) email address prior to their account being migrated to the new platform. 

If a customer doesn't supply an email address, HMRC will cancel their Direct Debit and the customer will need to pay their VAT via an alternative method.

How does this affect me?

If HMRC don't have an email address for you before they move your account to the new system, they will cancel your Direct Debit. HMRC intend to start moving these accounts in July 2021 and hope to finish the work by September 2021. 

Businesses should have received a letter from HMRC in May advising of this change. 

What do I need to do?

If you want to continue to pay your VAT by Direct Debit, log into your Government Gateway or Business Tax account and enter your email address as soon as possible.

If you don't do this in time don't worry, once your account has been moved, when you next log into your Government Gateway or Business Tax account you'll be automatically prompted to set up a new Direct Debit and provide a contact email address.