This year in the UK,10,400 firms of solicitor’s will bill circa £50bn in fees and collect £10bn in VAT for HMRC. This is expected to grow to £53bn in 2025 and over £60bn in 2027. Even after taking into account input VAT, that is a massive amount of VAT paid to HMRC.

Whilst there may be mutterings that your finance teams are unpaid tax collectors, paying HMRC every quarter can sometimes be challenging. The more successful you are, the greater your billings, the more your quarterly VAT bill is. Added to this is the issue of work in progress. Your unbilled work does not attract VAT, but the wages and other associated business costs still have to be met very month.

Solicitors in the main are very diligent about paying their HMRC VAT bills on time every quarter. This is one of the reasons why VAT financing for solicitors is so popular.

So what is HMRC VAT financing and how does it work?

It is actually a very simple loan product that has been around for many years. Let’s take an example of a legal practice with a £50,000.00 VAT bill due on the 7^th of November 2024.

Go onto our free VAT loan calculator on the VAT Loan page of our website. Put in £50,000.00 as your VAT bill. It will calculate exactly what the monthly repayment will be over three months, in this case, £17,618.33 per month, giving a total to be repaid of £52,855.00. We do not ask for your company name, we do not track your IP address, this is completely confidential.

Assuming you would like to proceed, we carry out a credit check and communicate back normally within 48 hours with a credit acceptance. A simple e-signature document is sent to you for signing. Our funder will pay HMRC on or before the 7^th November using your VAT number as a reference. You then make three monthly repayments starting on the 7^th December. Once the final payment has been paid on the 7^th February that is the end.

Using the example above, can we just fund some of the VAT bill?

Yes, we can fund from £10,000.00 and you settle the difference. Our funder would look for confirmation you have paid the balance between the VAT bill and the loan.

What information is needed?

Last three months bank statements, latest full set our company accounts if you are filing abridged accounts at Companies House. Directors’ details and a copy of the VAT bill. Management accounts may be needed.

It is now after the 7^th November 2024, can you still fund the VAT?

Yes, up to 14 days after your VAT period end. We cannot fund historic VAT.

I have paid the VAT but would like the cash back as working capital, can this be done?

Yes, some firms of solicitors prefer to pay their VAT bill and then take out a loan. As long as this is done within a couple of weeks of HMRC being paid, this can normally be achieved, subject to credit.

Do many legal firms fund VAT?

Absolutely. Historically, the VAT loan product was just developed for professions such as solicitors and accountants. Now our customers cover not just legal firms but most sectors of businesses.

Are personal guarantees required?

Often they are but this does depend on the size of your practice.

Please note, all loans are subject to credit, personal and or cross company guarantees may be needed.

In this article, we delve into the intricacies of HMRC Loans, offering a comprehensive guide to navigate their process. Securing a bank loan can be a drawn-out, challenging task. Their lending policies often pose difficulties if you’re aiming to borrow merely £8,000 for a quarterly term.

For UK-based firms unable to pay their VAT bills and facing potential 15% HMRC penalties, relief might be on the way. Surprisingly, a variety of reasons lead companies to choose tax funding firms like VAT Loans.

This enterprise thrives on facilitating numerous small-profit, short-term loans – all having repayment durations between three months to a year. There are no hidden charges or document fees that banks usually levy for profit. Our system is straightforward and swift. Transparent documentation allows customers to decide without apprehension.

We require details such as the following:

1. Your borrowing amount (£8,000 to over £1m)
2. Repayment duration (Three months to a year)
3. Preference for initial direct debit repayment timing
4. Your company’s name and contact info.

Upon receipt, we perform swift financial background checks and often provide loan approval indications within minutes, subject to full approval. Personal guarantees from the majority shareholders are obligatory for these HMRC tax funding loans, providing lenders with added security. You assure us that your business will continue operating in the next three to twelve months.

In case you halt operations after paying the HMRC bill from the company’s reserves, you stand to lose only the interest paid. We will seek your consent for a personal search, with full underwriting typically completed within 48 hours.

What follows?

The agreement is emailed to you for signing and returning to VAT Loans. You also need to confirm the date for us to pay HMRC. Most firms prefer the HMRC payment to be made three days before the due date, thereby precluding any late payment penalties. Clients usually request the initial direct debit payment to be deferred by a month post the tax bill payment.

All documents are available on our secure portal and our Tax Funding team is readily accessible for any queries.

HMRC is satisfied as your tax liability is settled on time.

Contact Us

Contact us if you require further insights into how HMRC Loans function. Reach out to our team via our contact page, call us on 01494 956 871, or email us at [email protected].

Without cash coming in and flowing out, growth and success can be extremely difficult to achieve. One issue that many business owners face is managing their VAT payments and ensuring they have enough cash to cover them. This is where VAT loans can come in handy. In this blog post, we’ll take a closer look at VAT loans, why they can be useful, and how to use them to optimise your cash flow.

Why are VAT loans useful?

There are a number of reasons why VAT loans can be helpful for businesses. Firstly, they can provide the cash needed to cover VAT payments. This allows businesses to avoid penalties and fees for late payment. Secondly, VAT loans can help businesses to manage cash flow more effectively. This is done by spreading the cost of VAT payments over a period of time. This can help to free up cash for other business operations and investment. Finally, VAT loans can be a useful tool for businesses that are going through a period of growth or expansion, allowing them to manage their cash flow more effectively.

How do you use VAT loans to optimise cash flow?

To optimise your cash flow using VAT loans, it’s important to plan ahead and understand your VAT payment schedule. This will enable you to identify periods where cash flow may be tight and plan accordingly. When applying for a VAT loan, it’s important to shop around to find the best deal. Therefore take into account interest rates, fees, and repayment terms. It’s also important to ensure that you have the ability to make the loan repayments on time and that borrowing won’t put undue pressure on your cash flow.

It’s worth noting that VAT loans shouldn’t be seen as a long-term finance solution. They are however designed to help businesses manage short-term cash flow issues and should be used as such. It’s important to re-evaluate your cash flow regularly and take steps to improve it where possible.

VAT loans can be a useful tool for businesses looking to optimise their cash flow. By providing the cash needed to cover VAT payments and spreading the cost over a period of time, businesses can free up cash for other operations and investments. However, it’s important to plan ahead, and ensure that borrowing won’t put undue pressure on your cash flow. VAT loans are a short-term finance solution and should be used as such. If you would like more information on how to use VAT Loans to optimise cash flow then please contact us.

One way smaller businesses can acquire necessary funds is through Value Added Tax (VAT) loans. VAT loans are designed to alleviate the cash flow constraints caused by VAT payment delays by the government. These loans offer a convenient way for businesses to address short-term financial complications and help maintain a steady cash flow. In this blog post, we will explore why VAT loans are vital for the growth of small businesses.

1. Helps to Keep Cash Flows Steady

Small businesses can suffer from inconsistent cash flow, with buying inventory or paying staff on time becoming a challenge. With VAT loans, businesses can keep their cash flows consistent and improve their financial stability. These loans are therefore designed to help businesses manage payments by offering a cash advance ahead of their VAT payments. This allows businesses to take care of bills and expenses, and avoid late payments and penalties.

2. Offers Flexible Repayment Options

One of the most significant benefits of VAT loans is their flexibility. Businesses can therefore choose to repay VAT loans over a few months to up to a year. This offers businesses the ability to make repayments in a manageable and practical fashion. The repayment plans for VAT loans can be tailor-made to fit the specific needs of the business. This allows businesses to regain control of their finances without incurring additional debt.

3. Boosts Growth and Expansion

VAT loans are specifically designed to help small businesses improve their cash flow and help them grow. They are not designed with only short-term loans in mind; the loans are intended to help businesses expand and succeed in the long-term. When businesses can manage their finances better, it allows them to invest in new machinery or equipment, which in turn helps increase productivity, improves speed of service, and reduces downtime. This can lead to increased revenue and profits.

4. Could save Money in the Long Run

By taking advantage of a VAT loan, businesses can save money. Late payments of VAT attract a penalty from HM Revenue & Customs, further putting a strain on cash flow. A loan will help the business pay the VAT on time, avoiding the late payment fees and interest rates. This means businesses can spend more time focusing on growth and development rather than worrying about how to settle their obligations for orders delivered or services rendered.

In conclusion, VAT loans offer a practical and efficient way for small businesses to manage their finances better. VAT loans provide flexibility and convenience that is not offered by traditional bank loans. If you would like more information on why VAT loans are vital for the growth of small businesses then please get in touch.

Managing financials is one of the most crucial aspects that you need to take care of when running a business to ensure the smooth running of your enterprise. And among all financial aspects, Value Added Tax (VAT) can be quite confusing for you, especially if your business operates in different countries and regions. However, if you need cash for your VAT obligations, VAT loans can be an excellent solution. The ultimate VAT loan checklist for businesses below will help you get started.

1. Understand What Is VAT

The first step towards taking a VAT loan is to understand the tax and its implications. Value Added Tax, as the name suggests, is a tax added at each stage of production and distribution. The final consumer pays for it, but businesses collect it on behalf of the government and claim back the VAT they’ve paid on their input. The percentage of VAT may vary depending on many factors such as the products or services types or the country where your business is located.

2. Evaluate Your VAT Obligations

The next step is to evaluate your VAT obligations. If your enterprise is small and has a low VAT threshold, you may not need to collect VAT. Ensure that you hire a skilled VAT expert who can review your VAT obligations and provide you with personalised guidance.

3. Check Your Financial Health

Lenders use your financial statements and cash flow projections to determine if you are eligible for a VAT loan. So, make sure that your financial records are in order and up-to-date. Besides, monitoring your financial health regularly will help you identify potential issues and give you time to take corrective measures.

4. Find the Right Lender

When looking for a VAT loan, you need to find a suitable lender who understands your financial needs and has flexible repayment terms to match your cash flow cycle. You can compare the different VAT loan rates, fees, and lending conditions offered by various lenders. Additionally, you can talk to your accountant, business partners, or other entrepreneurs to get recommendations.

5. Remember to Claim Back Your VAT

After receiving a VAT loan, you need to keep track of VAT payments carefully. Ensure that you submit timely VAT returns and claim back the VAT you paid on your inputs. This will help improve your cash flow and lower your finance costs.

VAT loans can help you secure cash to cover your VAT obligations, but make sure that you understand your VAT obligations, check your financial health, find the right lender, and remember to claim back your VAT. If you would like more information on the ultimate VAT loan checklist for businesses then please get in touch.