Should you setup a direct debit with HMRC?

HMRC have announced you can pay your PAYE automatically via direct debit through a variable payment plan

        Here’s why Intelligent Payroll won’t be using this for our internal payroll and why we are recommending to our clients that they shouldn’t also.


1.       Timing – if you have any reclaimable amounts (E.g. SMP/CIS etc) this needs to be submitted by the 19th, if the payment will be collected on the 22nd – this leaves a very short period for HMRC’s systems to ensure you are paying the correct amount.


2.       Penalties and Fines – if you have any of these on your PAYE account (for previous years or even just a late submission) who’s to say HMRC won’t automatically allocate your PAYE amount to those fines. (Also will they automatically take money from your account for penalties/late payment interest?)


3.       You are relying on HMRC collecting the correct amount each month, now this should be fairly simple as the amounts are on the RTI submissions. Vast majority of the time, this is the case however HMRC systems are not without their own quirks.


4.       If they take an incorrect amount, how long until you get it back or get it allocated correctly? How many man hours will it take for your payroll/finance team to ensure everything is allocated correctly and balanced to zero?


If you’re a large company, you might not mind a few thousand sitting on your PAYE account, however for the smaller companies, this would be a nightmare.

Sorry to sound so pessimistic – I do like the fact that HMRC are going down this route to try to make things easier for employers however too many variables at this moment in time. 

The payroll solution that your team has been waiting for. 

For more information, contact us today or book a demo.


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