HMRC have recently announced a change to their IT back office systems. This change will affect VAT businesses that are not signed up to Making Tax Digital (MTD) for VAT, but also a small number of businesses who already are signed up.
HMRC plan to decommission the VAT mainframe in 2022. As part of this process they will move all the remaining customer accounts from the mainframe to a new IT system. This process will begin in July 2021 and they intend to finish the work by September 2021.
The main issue for businesses is that HMRC will cancel customer direct debits before moving them to the new system. We have been told that HMRC will notify the affected businesses about this in a letter in advance, so please look out for any correspondence. This letter will provide details of how to log in a Business Tax Account (after the move to the new IT system) to re-setup a direct debit and provide a contact email address.
Please do not ignore the correspondence. It’s important to action the setup, as if the direct debit is not reinstated, customers will be required to pay their VAT through a different method, such as BACS or Chaps. This could lead to a missed payment and surcharge warnings or penalties levied.
Also please note that UK Banking Regulations require HMRC to inform customers paying by direct debit of the amount and date their direct debit will be taken. Due to the short space of time available between submitting and paying for VAT, HMRC will use email addresses to notify customers of this information.
Please feel free to contact us if you have any questions regarding the enclosed, and we will be happy to assist and advise if you have received correspondence from HMRC.