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HMRC internal manual

Debt Management and Banking Manual

From
HM Revenue & Customs
Updated
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Payment processing and accounting: payment methods: direct debit

Following the introduction of a cap on 31 May 2012 by the Board of Bacs Payments Schemes Ltd (Bacs) which limits the maximum value of any single Bacs transaction, HMRC are no longer able to collect direct debits in excess of £20 million. Affected customers should be referred to their Customer Relationship Manager and/or reminded that they need to make payment by an alternative method, such as CHAPS, to reach HMRC on the due date.

There are two different direct debit systems; the National Direct Debit System (NDDS) and VAT Online Direct Debit.

National Direct Debit System

Payment by direct debit can be set up for customers using the National Direct Debit System (NDDS). NDDS is a standalone system providing a paperless direct debit service which Debt Management and Banking (DMB), Debt Management Telephone Centre (DMTC) and Personal Tax Contact Centre (PT CC) users can access from their desktop. It allows the creation and maintenance of:

  • Single Payment Plans (SPPs) for one-off payments
  • Time to Pay (TTP) payment plans to cover arranged time to pay agreements
  • Budget Payment Plans (BPPs) to enable customers to make regular payments towards their future Self Assessment (SA) liabilities
  • Variable Payment Plans (VPPs) to enable customers to set up a direct debit to automatically collect the amount shown as due on their Machine Games Duty return.

Direct Debit online

Customers can access NDDS via their Online Services on the HMRC website. Customers must be registered for one or more of the following online services before they can set up a direct debit online:

  • Self Assessment
  • PAYE for employers
  • Corporation Tax
  • Construction Industry Scheme
  • Machine Games Duty

Customers can use NDDS to set up a single payment for:

  • Self Assessment
  • PAYE - including Class 1 National Insurance contributions
  • Class 1A National Insurance contributions
  • self-employed Class 2 National Insurance contributions
  • voluntary Class 3 National Insurance contributions
  • Corporation Tax
  • Machine Games Duty
  • other liabilities (ETMP (SAFE) payment references beginning with ‘X’).

They can also set up a Budget Payment Plan to make payments towards their future SA liabilities, and tax credits customers can self-serve a 12 month Time to Pay arrangement to repay overpaid tax credits.

More details can be found in the National Direct Debit User Guide (NDDUG).

(This content has been withheld because of exemptions in the Freedom of Information Act 2000) Direct Taxes Electronic Payments: Direct Debit(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

VAT online Direct Debit

VAT customers who are registered for the VAT online service can submit their VAT returns online and pay by direct debit. They can only pay by direct debit if they also submit their return online.

Only the amount shown as due on their online VAT return will be collected by the VAT Online Direct Debit service. We won’t collect any other outstanding amounts in this way.

Customers paying by direct debit get an extra seven calendar days after the standard due date to submit their online return.

If they pay by online direct debit we will collect payment a further three bank working days after the extended due date. This means that online VAT Direct Debit offers customers more time to pay than any other method - a minimum of ten extra calendar days. Bank working days are Monday to Friday excluding bank holidays.

Customers must set up their Direct Debit Instruction (DDI) before they submit their next return and at least two bank working days before the return is due when the due date falls on a weekday. For example, if their return is due on Tuesday 7 September, two bank working days before this is Friday 3 September.

If the return due date falls on a weekend or bank holiday they will need to set up their DDI at least three bank working days before the return is due. For example, if their return is due on Sunday 7 November, three bank working days before this is Wednesday 3 November.

If their return is due in less than two or three bank working days shown in the examples above then for this return only they will need to pay by a different electronic method.

More information about VAT online Direct Debit can be found on the Paying HMRC instructions on the GOV.UK website.