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BUFDG Call for Input
HMRC Consultation: Requiring payment of VAT and PAYE return liabilities by Direct Debit

RESPONSES BY 31 JULY 2026

HMRC has published a consultation into the introduction of mandatory payment by Direct Debit of VAT and PAYE liabilities. You can access the full consultation document here.

BUFDG will be responding to this consultation on behalf of the sector and are seeking your input, data, experiences, questions and comments to provide a full picture to HMRC of the challenges that will be faced by employers and HMRC themselves should they introduce this measure without detailed consideration.

There are 20 questions, split between three sections - those relating to VAT, those relating to PAYE and three questions at the end relating to both.

In many cases, we have provided a draft response to the HMRC question and are seeking your feedback on whether it is an appropriate response. We recognise that many of our draft responses are repetitive in nature! In other cases, we are seeking your experiences of challenges to flag to HMRC.

Please could you provide your responses to this survey no later than 31 July 2026, which will give us an opportunity to include all your comments within the BUFDG response.

Thank you for your input!
This section looks specifically at VAT
1.If you currently pay by Direct Debit or previously have done, what benefits or drawbacks, if any, have you experienced?

BUFDG understanding - we aren't aware of the extent of any universities currently or previously paying via DD - if you do or have, please provide your comments below.
2.If you were aware of the facility to pay by Direct Debit but have chosen not to use this payment method, could you explain why?

BUFDG DRAFT RESPONSE FOR FEEDBACK
We understand that since 2021, HMRC's online VAT account is the Enterprise Tax Management Platform (ETMP), a SAP system.

We have raised a number of concerns on behalf of our members about this platform and have recently been advised that there are “gremlins” in the system. Depending on who you speak to within HMRC, some are aware of the ongoing problems, whilst other are not aware of the issues or think they have been fixed, but our members current experience is that there are still significant issues with the ETMP. We were advised in January that a specialist team has been established to process overcharged interest and carry out reconciliations, with the work being treated as high priority and monitored at permanent secretary level.

We understand from conversation with HMRC that these issues are affecting a wide range of businesses not just the H E sector.

Until these issues are resolved HMRC should not make payment by D/D mandatory as we are concerned that it will exacerbate the issues that our members are experiencing.

The issues includes:
  • payments on account
  • small amounts of interest
  • misallocation of payments
  • delays in processing error correction notices
  • inability to get back to a nil balance- as taxpayers cannot see full history
  • inability of HMRC CCM’s to see full history as they also have limited access
  • examples of HMRC taking wrong amount
  • poor communications (e.g. POA value changes)

We are seeking examples of the above issues which we will anonymise within our response.
3.The government expects that making payment of VAT by Direct Debit mandatory could deliver benefits for businesses, including greater automation and reduced administrative burden. What benefits, if any, do you expect this change could bring to your accounting processes or wider business operations?

BUFDG DRAFT RESPONSE
Until the issues with the ETMP are resolved HMRC should not make payment by D/D mandatory as we are concerned that it will exacerbate the issues that our members are experiencing.

Our members usually pay by BACS. This enables them to control the amount paid and the timing of the payment. Our members will pay the amount on the returns NOT an adjusted amount as per HMRC’s records, which may not be accurate.

Please confirm this is an appropriate response and/or provide additional information.
4.What barriers or impacts, if any, might making payment of VAT mandatory by Direct Debit have on your accounting processes or wider business operations?

BUFDG DRAFT RESPONSE (yes, we know it's repetitive!)
Until the issues with the ETMP are resolved HMRC should not make payment by D/D mandatory as we are concerned that it will exacerbate the issues that our members are experiencing.

Our members usually pay by BACS. This enables them to control the amount paid and the timing of the payment. Our members will pay the amount on the returns NOT an adjusted amount as per HMRC’s records, which may not be accurate.

Please confirm this is an appropriate response and/or provide additional information.
5.If you do have chosen to use methods of electronic payment other than Direct Debit, are there particular benefits in your chosen method of payment that informed a decision to use these instead of Direct Debit?

BUFDG DRAFT RESPONSE:
Our members usually pay by BACS. This enables them to control the amount paid and the timing of the payment. Our members will pay the amount on the returns NOT an adjusted amount as per HMRC’s records, which may not be accurate.

Please provide any additional feedback below.
6.What barriers or impacts might you face by making VAT payments by Direct Debit?

BUFDG DRAFT RESPONSE
Until the issues with the ETMP are resolved HMRC should not make payment by D/D mandatory as we are concerned that it will exacerbate the issues that our members are experiencing. Being able to control the amount paid (especially the balancing amount when a member is on payments on account) is important. Our members will pay the amount on the returns/POA liability NOT an adjusted amount as per HMRC’s records, which may not be accurate.

Please confirm whether this is an appropriate response and provide further information/supporting experiences if relevant.
7.If you have set up a Direct Debit using VATC9 form or on your online VAT account and currently pay VAT by Direct Debit
  • comment on benefits of this method, if any, you have experienced
  • comment on drawbacks, if any, you have experienced
BUFDG comment: Please provide your experiences, if any
8.What, if any, barriers might you face or impacts might you experience on your accounting processes/business if POA instalments were collected by Direct Debit?

BUFDG DRAFT RESPONSE
Members with non standard tax periods have experienced significant issues with the POA.

Can you add any other examples?

For those members who've experienced problems, please could you provide feedback below.
9.What benefits, if any, do you foresee if POA instalments and the balancing payments were collected by Direct Debit?

BUFDG: Please provide your comments on potential benefits, if any.
10.Please highlight any other points that you would like to raise relating to mandating direct debits for VAT payments, that has not been mentioned above.
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