Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what estimate her Department has made of (a) the number of businesses currently unable to pay VAT by Direct Debit, (b) the number of VAT-registered businesses which do not maintain a UK bank account capable of supporting Direct Debit payments, (c) the implementation costs to businesses, (d) the implementation costs to HM Revenue and Customs; and whether an impact assessment has been completed.

The government is consulting on proposals to require payment of VAT and PAYE return liabilities by Direct Debit.

No decisions have been taken on the design of any future compliance or enforcement framework. The consultation seeks views on a range of issues, including possible incentives and sanctions to encourage compliance.

The consultation also considers whether exemptions or alternative arrangements may be required for particular taxpayers, and any practical barriers to using Direct Debit. This includes seeking evidence on circumstances where businesses may face challenges in making payments by Direct Debit and welcomes responses from all interested parties, including charities, representative bodies and other organisations, including the financial sector.

The consultation is intended to inform the detailed design of any future policy and implementation framework. As part of this process, the government is seeking evidence on operational impacts, implementation costs and potential exceptions, and stakeholders are encouraged to provide relevant information through the consultation. No final decisions have been taken, and the government will consider consultation responses before determining next steps.