More consultations hint at what's to come

The government has published a raft of consultations on tax and business policies. It is worth being aware of these, as they are a good indicator of future policy direction likely to impact small businesses.

It is worth noting that your responses to a subject of interest will not be wasted. Most consultations get surprisingly few responses, and those are generally dominated by interest groups and industry-related organisations. One consultation on Welsh tax proposals got only four responses.

Call for evidence on PAYE Settlement Agreements (PSAs)

HMRC have launched a call for evidence on how 'PAYE Settlement Agreements (PSAs)' operate in practice, to improve clarity, consistency and administrative efficiency. PSAs allow employers to settle the Income Tax and Class 1B National Insurance Contributions (NICs) due on certain benefits and expenses on behalf of employees, instead of reporting them through payroll or on a P11D.

The government is seeking detailed feedback on how employers decide what to include in a PSA, how the rules are interpreted, and whether the current framework remains fit for purpose. 

The call for evidence focuses on the practical operation of PSAs rather than the underlying tax rules for benefits and expenses. HMRC want to understand: - How organisations determine whether an item is minor, irregular or impracticable to report through standard PAYE routes. - How PSAs interact with other reporting mechanisms, including payrolling benefits and P11D reporting. - How employers apply the existing rules in real-world scenarios and where uncertainty or inconsistency arises. 

The government emphasises that PSAs are intended for items where it is genuinely difficult to identify the precise value attributable to each employee, such as catering at large staff events where individual consumption cannot be measured.

HMRC want to know how PSAs are managed, including time and resources, how employers handle calculations, including gross-up methodologies and allocation across tax bands. 

The call for evidence also explores whether PSA rules affect employers differently depending on size, sector or workforce structure. HMRC are particularly interested in whether SMEs face disproportionate administrative burdens.

The consultation closes on 15 September 2026. Responses can be made by email or by post. 

The full consultation document can be found at https://www.gov.uk/government/calls-for-evidence/paye-settlement-agreements-call-for-evidence/paye-settlement-agreements-psas

Mandatory Direct Debit proposed for VAT and PAYE payments

The government is consulting on proposals that will require most VAT-registered businesses and employers to pay VAT and PAYE liabilities by Direct Debit. The aim is to reduce late payment and simplify the payment process.

HMRC's analysis suggests that late payment is often linked to missed deadlines or to payments being allocated incorrectly, rather than to an inability or unwillingness to pay. Views are sought on why businesses that could use Direct Debit choose to pay by other electronic methods, the impact of requiring payment by Direct Debit and the exceptions or alternative arrangements that may be needed.

Currently, PAYE legislation only requires employers with at least 250 employees to pay via a range of electronic means, including Direct Debit.

Any changes would include updated sanctions for non-compliance and the consultation seeks views on these issues.

The consultation closes on 16 August 2026 and can be found at https://www.gov.uk/government/consultations/requiring-paymentof-vat-and-paye-return-liabilitiesbydirect-debit

If you have queries or face problems with these tax reporting requirements, please contact us. We are here to help.