HMRC is writing to VAT-registered businesses this month to tell them that any VAT direct debits will be cancelled if HMRC does not hold an email address for them. This is in order for HMRC to comply with UK banking regulations.

  • Current UK banking regulations require HMRC to hold email addresses for any business that make payments to HMRC via direct debit.
  • The taxpayer must be informed of a direct debit payment in advance and the time between the submission of a VAT return and the direct debit payment date is too short to allow for correspondence by post.

Potential cancellation:

  • Any businesses that have not provided HMRC with that information will have their direct debits cancelled at some point between July and November 2021.
  • For those not registered for Making Tax Digital, the cancellation will take place when the business' VAT record is transferred over to the new IT system. 

Affected businesses need to take action in order to continue paying by direct debit, a new direct debit is required to be set up and an email address provided. This can be done from the business' online Business Tax Account (BTA) only. It cannot be changed over the phone and an agent cannot make the change either.

Agents will not be receiving a copy of the letter.

If a new direct debit is not created and the email address is not provided, the business will need to make payment using an alternative method. Penalties may arise on late payments.

This does not affect direct debit payments made to the VAT payment deferral scheme.

Useful guides on this topic

Making Tax Digital: VAT (subscriber guide)
What is Making Tax Digital (MTD) for VAT? What is VAT 'functional compatible' software? What do you need to report their VAT? Are there penalties for making mistakes? 

MTD for Income Tax Pilot Tool
Find out if you eligible to take part in the MTD Pilot? 

How to register for VAT online (taxpayers)
Where to go and how to register for VAT online services.

Penalties (VAT)
When do penalties apply for VAT? What penalties are charged and how can they be mitigated?

External links

Sign in to your HMRC business tax account

Contact HMRC

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