Tuesday, December 16, 2008

Why would anyone sign a direct debit mandate in favour of HMRC?

Whoop de doo. HMRC are now encouraging taxpayers to set up direct debit payments online. This facility will now be available to anyone who is registered to use Self Assessment Online, PAYE Online for employers or Corporation Tax Online.

Would you want to give HMRC the right to debit funds directly out of your bank account? That's what this amounts to.

Previously the facility has existed but has largely been restricted to taxpayers with payment problems who have agreed a time-to-pay arrangement. I can understand that HMRC might have insisted on the facility as a quid pro quo of allowing time to pay.

HMRC's guidance contains a number of valid arguments in favour of payment by direct debit which clearly has a number of advantages and benefits. But I'm less sure about this suggested 'benefit' to taxpayers that: "it puts you in control". Er, isn't this the approach that gives the taxpayer the LEAST amount of control out of all of the payment options that exist?

Yes, I know that all banks and building societies undertake to abide by the standard Direct Debit guarantee, but I'd hate to have to rely on it in this situation.

Or is it just me?


  1. Yes its just the grumpy old man in you! many business already have direct debits with HMRC to pay their VAT online every quarter. paying VAT by DD give the business an extra 3 days to pay, but I don't think extra payment time is suggested for the income tax DDs

  2. Maybe HMRC should give a 5% discount for paying by DD on the basis that they want to be seen as a business. It might also turn out to be the most favoured "tax avoidance" scheme ever registered

  3. I nearly forgot to mention that if a client is paying by cheque remember and send it off to arrive at least 4 days before the tax is due as late payments will automatically give rise to interest (and if the return itself has been late a potential surcharge)