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HMRC internal manual

Compliance Operational Guidance

Supporting Guidance: employer compliance: guidance by subject: letter of offer: instalment arrangements - payments by direct debit

Direct Debit is the preferred method of payment for suitable instalment offers.

You should:

  • invite the employer to pay by Direct Debit at the settlement interview or, if unusually one is not held, before the draft letter of offer is sent
  • note that Standing Order arrangements are not possible.

Direct Debit facility is agreed

Where you have agreed with a customer that instalments due under the terms of a contract settlement will be paid by Direct Debit, you should advise the employer/contractor they can register to pay via online services on the HMRC internet site.

Customers unable to access the HMRC site can call 03000 544083 to set up a Direct Debit Instruction and Payment Plan over the telephone.

Note: details of the payments to be collected under the terms of the contract settlement will be needed for the Miscellaneous Charges Unit to set up the Payment Plan on NDDS.

A signed Direct Debit Instruction (DDI) is not needed unless the customer’s bank account requires more than one signature, or if the customer insists on completing a written instruction. If this is the case, print form DDI(NDD) (Word 62KB) and ask the customer to complete it and return it to you.

Note: The pre-printed address on the DDI(NDD) shows the Accounts Office Cumbernauld address because it could not be left blank. If you have to print and issue a paper DDI(NDD) to the customer:

  • amend/strike through this address
  • explain to the customer that they should return the completed DDI(NDD) to your office.

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

Payments on account

You should encourage customers who wish to make payments on account in advance of a final settlement to call 03000 544083 to set up a Direct Debit Instruction and Time To Pay Payment Plan.

Note: If there is just one payment involved it will be set up as a Single Payment Plan.

If the customer chooses to make the payment on account by cheque this should be processed in accordance with the guidance at EM1938.

If you do not know the charge reference (because the Direct Debit is being set up for payments on account of a final settlement and the charge is not yet issued) please use the Head of Duty ref prefixed by X on any communications with the Miscellaneous Charges Unit until the charge reference is known.

For example:

  • ETMP X123PA00456789

It is important that the letter of offer itself does not refer specifically to payment by Direct Debit. This could restrict the ability to recover by other means in the event of default. A standard form of words should therefore be used. They provide for payment on or before the last day of each month, to enable collection by Direct Debit on the date in each month chosen by the employer. Where an instalment agreement is agreed follow the guidance at COG914555 and make sure the amounts are precisely stated.