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Consultation: Requiring payment of VAT and PAYE return liabilities by  Direct Debit

30 June, 2026

HMRC have published a consultation on proposals to require payment of VAT and PAYE return liabilities by Direct Debit ('the consultation'). 

The consultation is seeking views on plans to make Direct Debit the default payment method for VAT and PAYE liabilities, with the aim of reducing late payment, limiting the flow of debt and simplifying the payment process to reduce error. This includes cases where payment has been made but using an incorrect reference, so is not allocated correctly by HMRC.

Currently, businesses can pay their VAT and PAYE liabilities using a range of payment methods, including Direct Debit. Under the proposals, businesses would be required to pay by Direct Debit, subject to certain exceptions.

HMRC is seeking evidence on:

  • the benefits respondents expect to see (including automation and reduced administrative burden)
  • practical barriers and implementation issues (including bank account constraints, cash‑flow management and process change)
  • where exceptions or alternative arrangements may be needed

The ATT will be responding to the consultation and would welcome feedback from members for consideration as part of our response. Please email [email protected] with your comments before 17 July 2026.