HMRC has indicated to ICAEW that employers need to allow extra time to set up any new variable DDs to pay PAYE. This means that for any collection shortly after 22 March, they need to be set up by employers by 10 March. However, if setting up to pay monies due on or after 22 April, then employers need to set up the DDs by 12 April.
HMRC’s current guidance Pay employers' PAYE, says that employers should set up DDs at least six working days in advance of the payment due date. In the light of the latest recommended dates from HMRC for setting up a direct debit for March and April 2023, the faculty recommends that DDs are set up at least nine working days in advance of the payment date.
The deadline for setting up a DD that will collect PAYE with a payment due date of the 22nd of the month is earlier than HMRC would like. HMRC is working to shorten that lead time, but it will take a while to introduce.
The faculty has previously highlighted that:
- interest charges are added to employers’ accounts for the period from the normal due date for payment (22nd of the month) to when the DD payment is collected, and then reversed provided the DD is successfully collected first time; and
- HMRC’s systems issue automatic generic notification service (GNS) late payment notices to employers paying by variable DD, which can be ignored.
ICAEW has expressed its disappointment to HMRC about this latest change and requested an update as to how work is progressing on supressing the interest charges and GNS late payment notices.
The Tax Faculty
ICAEW's Tax Faculty is recognised internationally as a leading authority and source of expertise on taxation. The faculty is the voice of tax for ICAEW, responsible for all submissions to the tax authorities. Join the Faculty for expert guidance and support enabling you to provide the best advice on tax to your clients or business.
More from the Tax Faculty
Stay up to date with the latest developments in tax by signing up to the Tax Faculty's weekly e-newsletter
Comprehensive support for Tax practitioners each month from the Tax Faculty and expert contributors.
Expert advice from the Tax Faculty's technical managers on all the developments in tax policy and practice.