07 July 2026
HM Revenue and Customs (HMRC) has launched two consultations seeking views on proposals designed to reduce late payments and improve debt recovery.
Consultation on Tackling lower value tax debts
The Government has published a consultation on proposals to extend debt recovery powers to help ensure those who can afford to pay their tax liabilities do so. The proposals are aimed at a small minority of taxpayers who persistently fail to engage with HMRC despite repeated attempts to contact them.
Under these proposals, HMRC could recover lower-value tax debts through affordable monthly instalments deducted directly from a taxpayer’s bank or building society account. HMRC have outlined a range of safeguards, including protections for individuals experiencing financial hardship or requiring additional support, advance notification before any deductions are made, and opportunities for tax payers to contact HMRC to discuss alternative payment arrangements.
This consultation closes on 28 August 2026.
Consultation on requiring VAT and PAYE payments by Direct Debit
The Government has also published a consultation seeking views on plans to require businesses to pay VAT and PAYE return liabilities by Direct Debit. The proposals form part of wider efforts to improve payment timeliness, reduce the build-up of tax debt and simplify the payment process.
PAYE and VAT payments are often made manually, which can lead to late payments, payment errors and incorrectly allocated liabilities. The Government believes that greater use of Direct Debit can help automate the payment process and create a more streamlined approach to tax compliance. They are seeking feedback on potential exceptions, implementation challenges and any safeguards that may be required.
The consultation closes on 16 August 2026.
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