Regulations came into force on 13 August 2008 which permits HMRC to charge a fee on credit card payments made over the telephone. This follows on from legislation introduced in the Finance Bill 2008 to allow HMRC to accept payment by credit card beyond the limited circumstances where it currently does so (ports, airports and roadside fuel testing units).

These Regulations specify that a fee must be paid in respect of payments by credit card made over the telephone equal to 0.91% of the payment.

This measure is introduced on foot of initial consultation in June 2007 (Payments, Repayments and Debt: the Developing Programme of Work). That consultation paper recommended that payments could only be accepted in this way if the cost to HMRC was passed on to the payer. Further consultation, including draft legislation, was published on 10 January 2008.

The fee of 0.91% is calculated according to a formula based on the commission rate which ensures that HMRC recovers the whole cost of the transaction from the customer but no more. The rate reflects the competitive pricing achieved through recent procurement for all banking services. This rate will be reviewed periodically in the light of the volume and value of transactions; and the type of credit card used.

HMRC have given undertakings that they will offer, but not press for, payment in this way and would give customers suitable warnings of the rate charged and advice before payment is accepted.

For further information see the following link: http://www.hmrc.gov.uk/si/2008-1948-em.pdf