British firms that pay their tax in full and on time could be fined for choosing the wrong way to pay under plans now sitting on the Chancellor’s desk.

Taxmen now want Direct Debit to become the default way for businesses to pay VAT and PAYE, letting HMRC yank cash straight from bank accounts on the day it falls due.

Anyone paying via a traditional bank transfer would have to ask for an exemption or risk a penalty, even if every penny arrives on time, Conservatives say.

Analysis shows an estimated 2.4 million employers, sole traders and companies will be caught in the Treasury snare.

Chancellor John Healey is rumoured to be weighing up the plan ahead of his very first Budget this Wednesday.

Read more: No matter who is theoretical ‘power’ the Cult agenda goes on and on: Fury as HMRC plots fines for firms that pay taxes on time unless you do it their way