Paying PAYE by Direct Debit

Paying PAYE by Direct Debit

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https://www.gov.uk/pay-paye-tax/direct-debit says:

"Set up a Direct Debit through your business’s HM Revenue and Customs (HMRC) online account to make a single payment. This means you’ll need to set up a payment each time you pay HMRC through Direct Debit"

Is it just me, or is that completely stupid?"

Replies (15)

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Euan's picture
By Euan MacLennan
27th Aug 2015 10:43

It is just you

The PAYE DD payment is not linked to the submission of FPSs & EPSs as is the VAT DD payment to the submission of VAT returns.  Hence, you have to tell HMRC how much to take each time by setting up a 'payment plan'.

This has come up before.  I think it would be impossible for HMRC to process the DD by the last working day up to the 22nd, when EPSs (for recovery of SMP and CIS tax suffered by company sub-contractors) do not have to be submitted until the 19th.  What I find irritating is that the input screen is not pre-populated with the client's AO reference and that when you enter the YYMM reference for the month, it does not automatically set up the payment date.

Thanks (2)
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By chatman
27th Aug 2015 10:36

Setting up DD for PAYE for every payment

Thanks Euan. What I meant is "is it just me that thinks it would be mad to set up a direct debit, when you have to process they payment every time anyway"?

Thanks (1)
Replying to Paul Crowley:
Euan's picture
By Euan MacLennan
27th Aug 2015 10:49

I don't think it is mad

chatman wrote:

Thanks Euan. What I meant is "is it just me that thinks it would be mad to set up a direct debit, when you have to process they payment every time anyway"?

The merits of the DD is that HMRC cannot argue about whether the payment has been made by the due date - it is up to them to take the payment - and the payroll provider can set up the DD payment at the same time as running the payroll (using the client's User ID and password, which the payroll provider may well have set up in the first place), which avoids the client having to remember (or forget) to set up a bank transfer every month.  Our payroll clients are only too happy that it is one less thing for them to worry about.

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By chatman
27th Aug 2015 11:39

It is me

Yeah, you're right - it is just me.

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RLI
By lionofludesch
27th Aug 2015 12:27

RTI

I still think it could be improved.  It doesn't work like that when you pay your VAT which is run by - oh, hold on a minute - the same organisation !!

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By Mark Three
27th Aug 2015 13:13

is it too much to ask rti to do this

a bit of lateral thinking with the rti submission could surely activate the dd.  But, then again, I suppose that is one step closer to HMRC paying the employees from the business bank account - seem to have heard about that somewhere.

 

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By Democratus
27th Aug 2015 13:49

If you depend on HMRC to do it ....expect errors

My PAYE dashboard is wrong - they would have taken less and when they eventually discover their error i would be in the wrong as a "customer" often is in these circumstances.

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RLI
By lionofludesch
27th Aug 2015 14:20

Au contraire

The customer is always right.

Since they insisted on calling us "customers", take advantage of it.

Again - has anyone had the wrong amount of VAT direct debited ? I suspect not.

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Replying to ireallyshouldknowthisbut:
Euan's picture
By Euan MacLennan
27th Aug 2015 15:09

Yes, but ...

lionofludesch wrote:

Again - has anyone had the wrong amount of VAT direct debited ? I suspect not.

The amount of the VAT payment is taken directly from Box 5 of the VAT return which you have submitted.  There are no other factors which could affect the amount, so how could it possibly be wrong?

It is different for PAYE where the FPS (or more than one FPS if paying weekly) is not the only source of the amount payable.  It could be reduced by EPSs, which may or may not be submitted and only have to be submitted by the 19th with the payment due on the last working day up to the 22nd.  It will only be feasible to calculate the PAYE DD automatically when HMRC amends the RTI system so that the FPS includes all the EPS figures and separate EPSs are not required.

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Replying to Ken Moorhouse:
RLI
By lionofludesch
28th Aug 2015 09:18

Point taken

Euan MacLennan wrote:

lionofludesch wrote:

Again - has anyone had the wrong amount of VAT direct debited ? I suspect not.

The amount of the VAT payment is taken directly from Box 5 of the VAT return which you have submitted.  There are no other factors which could affect the amount, so how could it possibly be wrong?

It is different for PAYE where the FPS (or more than one FPS if paying weekly) is not the only source of the amount payable.  It could be reduced by EPSs, which may or may not be submitted and only have to be submitted by the 19th with the payment due on the last working day up to the 22nd.  It will only be feasible to calculate the PAYE DD automatically when HMRC amends the RTI system so that the FPS includes all the EPS figures and separate EPSs are not required.

Take your point, Euan, but, imho, it's a weak argument.  The VAT return doesn't have to be submitted until 7th, the money's taken 3 working days later.

It wouldn't take much jiggling around with dates to make it work.

Thanks (1)
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By chatman
27th Aug 2015 18:50

Can you do it from the agent login?

I just logged in to the portal but could not see how to do it. Is it available from the agent portal or do you have to log in as the client?

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Replying to ally1:
Euan's picture
By Euan MacLennan
28th Aug 2015 13:51

No - you can't as agent

chatman wrote:

Can you do it from the agent login?

I just logged in to the portal but could not see how to do it. Is it available from the agent portal or do you have to log in as the client?

You can only set up the PAYE DD payment plan by logging in as the client.

Thanks (1)
By Charlie Carne
28th Aug 2015 13:15

PAYE DD needn't be compulsory but offer option of auto-recurring

I understand the issues that Euan raises regarding multiple FPS for weekly payrolls and later filing deadlines for CIS, etc. But, if automatically recurring DD for PAYE were offered by HMRC (as they do for VAT), then it would be a great service for companies that have a simple, monthly payroll, no CIS issues and no SMP/SSP (as is the case for most of my clients). And, as Euan also points out, if HMRC changed the RTI system so that the FPS obviated the need for a separate EPS, then there would be even fewer companies that could not avail themselves of the automatic DD. Those companies for whom a payment based upon a single FPS is inaccurate need not sign up for the recurring DD but can, instead, use the existing system and set it up manually each month or pay by other means (eg internet banking).

HMRC need to collect more tax, on time and cheaply. Once a recurring DD has been set up once by the client, all future payments are received on time by HMRC at virtually no cost. It would benefit HMRC greatly to make this happen.

Finally, I don't see how I, as the accountant, can set up a manual DD each month for my client when I am not a signatory to their bank account. With a recurring DD for VAT, I get my client to set it up once and then I can file the VAT returns (once my client has approved them) and the payment will be taken automatically by HMRC; I am not setting up or authorising the payment (my client did that when he set up the DD some time ago). And, as I cannot set up the DD on behalf of my client, I see very little advantage in my client setting it up for PAYE manually each month via the HMRC portal over using internet banking and, as my client is doing it, it is prone to the same errors that would be avoided if I could control the whole process on their behalf.

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Replying to I'msorryIhaven'taclue:
Euan's picture
By Euan MacLennan
28th Aug 2015 14:14

PAYE DD payment

charliecarne wrote:

Finally, I don't see how I, as the accountant, can set up a manual DD each month for my client when I am not a signatory to their bank account. With a recurring DD for VAT, I get my client to set it up once and then I can file the VAT returns (once my client has approved them) and the payment will be taken automatically by HMRC; I am not setting up or authorising the payment (my client did that when he set up the DD some time ago). And, as I cannot set up the DD on behalf of my client, I see very little advantage in my client setting it up for PAYE manually each month via the HMRC portal over using internet banking and, as my client is doing it, it is prone to the same errors that would be avoided if I could control the whole process on their behalf.

Whilst I like your idea of an option to pay PAYE automatically, I think you are wrong about a PAYE DD being different in nature to a VAT DD.  Both DD authorities are set up at the outset.  If you are squeamish about ticking the box to say that you are a bank signatory, you can get the client to set up the initial PAYE DD authority, just as you do for the VAT DD authority.  What follows is merely procedure.  The amount of the quarterly VAT payment is set automatically, but you have to enter the amount of the PAYE payment each month or quarter.

We set out in our engagement letters that we will arrange payment from the client's bank account if requested and we always ask them to confirm the details of the bank account from which they would like us to arrange payment.  I regard that as sufficient authority for me to act as the client's agent in setting up the initial DD authority.  We also say in our engagement letters that we will submit VAT returns or run payrolls and submit PAYE RTI returns based on the information provided to us by the client and I regard that as sufficient authority to submit the respective returns without going back to the client for specific approval of the return.  We do send a copy of the submitted VAT return or in the case of payroll, payroll reports and payslips, as soon as we have submitted the returns and well before the tax payment is due.  The deal is that the client will provide us with all the correct information and that we will use our professional skill to process that information correctly.

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By PracticePartner
28th Aug 2015 13:46

Many small employers pay PAYE quarterly ....

... but file FPS monthly. Then you have other factors such as funding for statutory pay to adjust for. But as there is only one offline payment deadline per month, the 19th, with the 22nd for online payments, I don't see why an arrangement similar to VAT couldn't work, perhaps in conjunction with a tweak to the payroll systems specification.

Of greater irritation to me is being unable to access the PAYE dashboard via Agent login.

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