We recognise HMRC's objective of reducing late payment, limiting the growth of tax debt and improving administrative efficiency. However, we are concerned that the consultation has not demonstrated that mandatory Direct Debit is a proportionate response to the issues identified, particularly for large and compliant taxpayers.

We highlight that HMRC’s stated policy is to reduce late payments “linked to oversight or payments being allocated incorrectly rather than an inability or unwillingness to pay” (i.e. due to a lack of internal controls). ‘Oversight’ is rarely applicable to UK Finance members who operate under heavy regulations and have sufficient controls and processes to mitigate the risk of non-payment.

For the compliant majority, this consultation does not demonstrate that widespread behavioural intervention is needed. Where non-compliance is concentrated among a minority of taxpayers, targeted measures would be more proportionate than imposing mandatory payment mechanisms on all businesses, particularly when the proposals are considered alongside the risks that they could create.