How do HMRC Loans work

How do HMRC Loans work?

Applying for a bank loan can be a time consuming and arduous process. Their lending policy may not easily work if you only wish to borrow £8,000 over a three-month term. In this blog we will be asking the question of how do HMRC Loans work to give you the ultimate guide into understanding the process behind them.

For UK companies who may not have the cash to pay their VAT bill, and are potentially looking at a 15% fine from HMRC, help may be at hand. Interestingly, there are many reasons why companies use tax funding companies like WestWon.

This business is built upon our completing many loans – all short term between three months and one year in repayment duration. The profit per loan is small – there are no documentation fees or hidden extras that many banks charge to make their profit. We rely on a quick and simple system. Clear documentation will allow you, the customer, to make a decision without a fear of “what is the catch.”

We need the following information

  1. How much are you looking to borrow? (£8,000 to over £1m)
  2. How long do you wish the loan repayment to last? (Three months to one year)
  3. Would you like to pay your first direct debit repayment before HMRC are paid, or shall we delay it for a month? (Most companies request the one month delay)
  4. The name of your company and contact information.

Once we have this, we will conduct a few quick searches on financial information in the public domain. We will give a good indication as to “yes” or “no” often within minutes, subject to a full approval.

Personal guarantees of the main shareholding directors are always needed for these HMRC tax funding loans.  It makes sense from a loan provider’s perspective as being more secure. You are saying that you believe your company will still be trading in three to twelve months. If you were to pay the HMRC bill from the company’s cash reserves, and you did stop trading; technically, you are no worse off other than the interest you have paid. We will ask for your permission to undertake a personal search on you.

Full underwriting will take up to 48 hours. For many companies, this will be quicker.

What happens next?

The agreement is then emailed to you. Then, it is a simple case of signing the paperwork and returning it to WestWon. We will also ask you to confirm the date you would like us to pay HMRC. Most companies will ask for the HMRC payment to be made up to three days before the bill is due, thus avoiding any fine for late payment. Most clients also request the first direct debit payment to be deferred for a month after the tax bill has been paid.

All documentation is on our secure portal. Our Tax Funding team is on hand to answer any questions you may have.

HMRC are happy, and we will have paid your tax liability on time directly to them.

Contact Us

If you would like more information on how do HMRC Loans work, then head over to our contact page on our website to speak to a member of our team. Furthermore, if you would like to talk to us over the phone then please call 01494 956 871 or email hello@vatloans.co.uk.

business' finance journey

Let us help you with your business’ finance journey

Here at VAT Loans we offer finance for a range of things and hope to help you in your business’ finance journey. We will provide you with a 5* customer service experience and we will tailor the agreement to fit you and your needs. We offer finance for a range of business loans which you can read more about below. Hopefully this blog will show you the benefits not just to working with us here at VAT Loans, but also to leasing in general. If you would like to know more, then please read on.

What do we offer finance for?

Here at VAT Loans it may not surprise you that we focus a lot on arranging VAT Loan agreements! However, you may not know what else we can finance. We offer finance for a range of business loans. These include Corporation Tax Loans, Professional Indemnity Insurance funding and Bridging VAT finance. We can also provide finance for professions loans, equipment loans, dilapidation loans, working capital and peer-to-peer loans. We have explained some of these in a previous blog. Offering a wide range of business loans is possible due to our team of professionals here at VAT Loans. Although some of the business loans have different processes, they are all easy and straightforward to complete. Therefore, don’t hesitate to get in touch with us using our contact details at the bottom of this blog.

Why choose VAT Loans?

VAT Loans has helped thousands of customers with their finance agreements. Below are just a few reasons why you should choose us to help with your next finance agreement.

  • Industry leading rates from 2.5%
  • Decision in 48 hours or less
  • 95% acceptance rate
  • 5* customer service
  • Dedicated account manager

What will finance do for your business journey?

There are many benefits to leasing and finance, one of them being how it helps your cash flow. It allows you to keep funds in the business and use them elsewhere for other projects. Another is that you are able to use alternative funding lines. Instead of using an existing bank facility, you can open up other sources of funding. This will look better too when applying for loans. The process is also fast and simple. We pay HMRC directly for you so that there is no hassle or worry form your end. There is also an easy to use repayment schedule as we use fixed monthly payments. This also allows you to budget better as you know what is coming out of your bank account and when.

Contact Us

For more information on how we can help you with your business’ finance journey or for a free no obligation quote, please give a member of the VAT Loans team a call on 01494 956 871 or email us on hello@vatloans.co.uk.

business loans do we offer

What business loans do we offer – your ultimate guide

Here at VAT Loans, we offer finance for a range of business loans. All of these will be covered in the blog below. If you have any other questions about loans we can offer, or other assets we provide finance for, then please get in touch. The contact details can be seen below.

VAT Loans

This is the most obvious one of course. VAT Loans are now being used by more companies in the UK to help with their business’ cash flow. We used to see mainly just professions like accountants and lawyers using VAT Loans. However, it’s now all sorts of businesses, no matter the size. Any business that is already registered for VAT can apply for a VAT Loan, starting from £10,000+. We pay the bill directly to HMRC meaning you don’t have to worry about a thing. You will then make monthly repayments (usually 3) after the agreement has started.

Corporation Tax Loans

For any business that has a HMRC Corporation Tax bill to be paid, which includes most throughout the UK, this loan is essential. We will do the same thing that we do for a VAT Loan and pay it directly to HMRC. However, with this loan we arrange for the bank to pay them directly using your unique tax reference. The process is again simple and easy to go through. We will need some basic information in order to start the process. Once this has been acquired, we can get to work and activate the agreement. You can pay this agreement in monthly repayments in a 3–10-month period, whatever suits you best. The payments normally start around a month after the agreement is activated. This is the same with a VAT Loan.

PII

Professional Indemnity Insurance is an insurance policy for any UK business that offers advice or a service to their customers. However, it depends on the type of business you are whether the insurance is a large or small cost. If it is a large sum it is much better to pay it back in monthly instalments, which is what we at VAT Loans can offer for you. Subject to credit we can fund the insurance cover over a 1 year period, meaning you have longer to pay it back. This all depends on the amount you wish to spread over the agreement term. All we need is a PI quote from your insurance company and we can send over a quote. Our funder will then pay your insurance company directly.

Other Business Loans

We also provide finance for several other business loans. These include Bridging VAT Finance, Property VAT Loans, Professions Loans, Equipment Loans, Dilapidation Loans, Working Capital Loans and Peer to Peer Funding. We would be happy to assist you with any of the loans you see above. Just get in touch with us and a member of our friendly team will be in contact in no later than 24 hours!

Contact Us

For more information on what business loans we offer here at VAT loans or for a free no obligation quote, please give a member of the VAT Loans team a call on 01494 956 871 or email us on hello@vatloans.co.uk.

List of VAT Finance lenders UK

List of VAT Finance lenders UK

Throughout this blog I will be breaking down a list of VAT finance lenders across the UK. VAT finance is a specialist form of lending that companies in the UK use to fund quarterly HMRC VAT bills. Historically, it was mainly professions such as solicitors, accountants, and architects that would finance VAT. Today, all sorts of UK companies fund their VAT for a whole variety of reasons.

So where do you find a list of VAT finance lenders in the UK?

VAT Loans are a key finance company in the UK, funding VAT for our clients. We have searched for such a list and as far as we can see, there is no definitive list of VAT finance lenders out there.

However, luckily for you, we have independently compiled a list of UK VAT Finance lenders from a deep dive on Google. Hopefully this blog will be helpful to those seeking VAT funding exploring their options. So, let’s get into it, we can split the list into two parts.

Funders

Firstly, there are the funders, the actual finance companies that lend the money.

Premium Credit Limited is by far the largest company operating in this space. They call themselves ‘The number one premium finance company in the UK and Ireland.’ With 2.1m customers and processing 24 million direct debits per year, we as an independent company will agree, they are the largest. Please note, only a small fraction of their business is VAT funding, most of the other funding is for insurance premiums, golf club memberships, school fees, train season tickets etc. It maybe such you already deal with them on the insurance side or in a personal capacity. However, contacting them for VAT funding will be more challenging, it is a lot easier to go via a broker such as ourselves.

There are other funders in the market such as Shawbrook, White Oak, Federal Capital, Time Finance, who fund VAT. Again, some of these companies will not deal with an end user directly. For those that do, it can sometimes be a bit challenging to navigate around who to speak to and how to deal with them.

Brokers

Secondly, there are brokers (the middle men) that offer VAT funding.

VAT Loans have scoured the market analysing who is our competition on Google and have stumbled across 23 other companies. Three of these seem to be ‘internet only’ business types. Although, they would much rather be referred to as ‘Fintech’ companies. In summary, great websites, but lacking that personal touch of human interaction. We have not checked their accounts, but as a guess, they will be losing money.

All the others are brokers who advertise the fact they offer VAT funding for UK companies. We have individually reviewed all these companies. On average, they employ between two and ten people and offer a range of finance facilities for companies. For the record, they all seem decent companies, many of them have been trading for a long time. So that’s always promising.

Competitive HMRC VAT funding UK

The market for VAT funding in the UK is competitive. As you can see above, anyone can put ‘VAT Loans’ into Google and up comes a list of companies that will help you. And from what we can see, most companies are offering competitive repayment terms.

Another thing to bear in mind as a customer is that our funding partners limit how much we can earn in commission. In summary, all of us intermediary brokers are swimming in the same pool trying to win the same business. We all have to be competitive. And there is nothing wrong with a bit of healthy competition.

Best UK VAT funder?

Stating who is the best UK VAT funder is very difficult. Rates are competitive, loan agreements are often worded the same. From what we see, there are only two differentiators:

  1. Credit acceptance – this is where one funder rejects a deal and another one accepts it. Having a wider panel of UK VAT funders does help.
  2. Whilst some people are happy and content just to undertake business via email, other companies – especially those new to funding VAT – will wish for some more human interaction.

We cannot comment on other UK HMRC VAT funding companies with regards to their level of service. However, what we can say is that to our customers, service level is of paramount importance.

  1. Phone conversations are important. We must answer the phone and not just communicate via a chat facility or email.
  2. Speed and urgency are the number one priority. Most of our business comes in the third week of the month. We then have to arrange credit, send out documents, and get HMRC paid by the 7th of the following month. (Over 50% of our clients will leave their VAT funding to the last minute.)
  3. Understanding the process and ensuring that a VAT loan is put in place quickly is often at the top of a clients’ agenda. Having the detailed knowledge from doing many VAT loan deals in the past does help. Interestingly, when we look at our 23 competitors, most of the smaller independently owned companies do have the in-depth knowledge. We have not tested the ‘fintech’ companies, but our gut feel is they will not have a great a knowledge pool compared to the likes of us.

We hope this blog proves useful to you in your decision making. Should you have any questions on the VAT loan process, creditworthiness, or anything else, we would be happy to help. Please don’t hesitate to get in touch, give us a call on 01494 611 456. Or send an email to hello@vatloans.co.uk. Or, if you have any questions about VAT in general, you can always visit the HMRC  website here.

VAT loans for scaffolding companies

VAT loans for scaffolding companies

Most scaffolding companies we speak to about leasing for their kit, are not aware that we can also offer VAT loans. It’s not a new product / our loan service, but it is a product that seems to be growing in interest. Read on for more information on how we can organise a VAT loan for your scaffolding company.

Why would a scaffolding company need a VAT loan?

Your scaffolding business has raised invoices over the last quarter. Some of your customers would have paid, but almost certainly, there will be a few that are still outstanding.

Add into this the winning a few new contracts coupled with buying or hiring more scaffolding kit, before you know it, there is not the money there to pay the VAT bill. It’s not that your struggling, it’s more often the complete opposite!

It’s often scaffolding companies that are doing well that need a VAT loan!

If you are not raising any invoices there will not be a VAT liability, hence no need for a VAT loan. We speak to loads of scaffolding companies that are talking to us about a VAT loan. They are often very successful and large companies. One scaffolding company we were speaking to recently was looking for an £800,000 loan facility to cover their quarterly VAT liability.

How does a VAT loan work for a scaffolding company?

Getting a VAT loan is normally quick and simple. What we will need from you:

A VAT statement saying what is due to HMRC

Your latest audited accounts (maybe management accounts)

We will give you a free no obligation quote telling you exactly what the repayments will be.

Then we get a credit approval and email you a loan document to be signed.

We / our finance company will pay HMRC directly

You make repayments back over the VAT loan period

Contact Us

For more information on VAT loans for scaffolding companies or for a free no obligation quote, please give a member of the VAT Loans team a call on 01494 956 871 or email us on hello@vatloans.co.uk.

VAT Loan Interest Rate

VAT Loan Interest Rate

What is a HMRC VAT loan?

A HMRC VAT loan is a specific form of financing for a VAT bill. There are a few key elements to a VAT Loan Interest Rate and a VAT loan that make it different from other forms of funding:

The loan principle is paid directly to HMRC (in the majority of cases)

The loan is short term, normally three months

Why would a UK company apply for a VAT loan?

UK companies use VAT loans when they know they have a VAT bill to pay on a specific date. Also when they wish to spread the expense over the following three months. There are many positive reasons why a company would do this. Interestingly, most companies who need a VAT loan are doing well. Often VAT loans are needed when there is a miss-match between purchase and sales invoices or clients have not paid. Asking for a VAT loan by no means indicates there is any financial danger to the company.

How are the repayments made to the VAT funder?

Nearly all of the VAT loans we write are on what we call a 0+3 repayment basis. No deposit followed by three monthly payments.

Example: If we pay HMRC on the 5th February for the VAT period October through to the end of December, the loan repayments would have the first payment being in March.

This is different and slightly more expensive than making the repayments on a 1+2 basis, first payment being in February.

Using a 1+2 monthly repayment structure means you are only borrowing 2/3 of the VAT bill and making the final payment one month earlier.

Always be careful when comparing VAT loans and what interest you are paying, it maybe you are not comparing like with like.

What is the VAT loan interest?

Lets look at two examples of a £10,000 and £100,000 VAT loan.

In summary, we work on a 0+3 monthly loan repayment basis. Secondly, the larger the loan, the cheaper the interest rate.

VAT Bill Monthly Repayment      Total Repayment             Monthly Interest

£10,000.00           £3,616.67             £10,850.00           £283.34

£100,000              £35,416.67           £106,250.00        £2,083.34

Contact Us

For more information on VAT Loan Interest Rate or for a free no obligation quote, please give a member of the VAT Loans team a call on 01494 956 871 or email us on hello@vatloans.co.uk.

VAT Loan guide

VAT Loans: A guide

Are you new to VAT loans? And perhaps would like to gain a better understanding on how they work before going any further? Then look no further. Have a read of the short guide below to find out everything you need to know about VAT Loans in just under 5 minutes.

Can a UK company finance a VAT Bill?

 

Yes, there are specialist finance companies that will finance a VAT bill.

 

What is the minimum VAT bill amount that can be financed?

 

Normally, most Guides to financing a VAT Bill finance companies will start at £5,000. Theoretically, there is no maximum. To give you a rough idea, our average VAT loan amount is £60,000.

 

How easy is it to get credit cleared?

 

The process is quick and simple. You will need to show a copy of your VAT bill and a full set of your latest audited accounts. Often, the underwriters will need to see management accounts and three months bank statements to support the application.

 

Do we have to provide a personal guarantee for VAT loans?

 

More often than not, you will not need to offer a personal guarantee.

 

Who makes the payment to HMRC?

 

Just to make your life that bit easier, once you have signed the loan agreement, our funder will send the money directly to HMRC using your VAT number as a reference code. HMRC are all OK with this.

 

How much interest do we pay and how do we calculate the monthly repayments?

 

Please click here to visit our VAT calculator. Enter your VAT bill amount and the VAT calculator will work out the monthly repayment and total repayments. We do not collect your information, its free to use.

When do we start to make the loan repayments?

 

Most companies opt to repay the VAT loan over three months, the first month’s payment coming out 30 days after HMRC have been paid.

 

Why finance a VAT loan?

 

VAT loans are a multi-million-pound business in the UK. Previously, they were exclusively used by accountants and solicitors, now all sorts of companies fund their quarterly VAT payments. As to why, there are many reasons. Just to name a few: Investment into stock, financing work in progress, allowing clients to have extended payment terms, using VAT money internally to fund other projects.

 

Finally, for some companies it is cheaper than paying a late interest fine to HMRC.

 

What will HMRC think if we use a finance company to pay the VAT bill?

 

Nothing, they do not mind at all. All they see is the VAT bill is settled in full and on time.

 

Does undertaking a VAT loan affect my company credit rating?

 

No.

 

What level of bad debt do you see as a finance company?

 

Bad debt is relatively low. Companies who use a VAT loan facility want to pay HMRC what is owed. Therefore, they do not wish for the aggravation of paying late. Companies are confident they will be in business in three months, otherwise, why just do not pay the bill in the first place.

 

How do I apply for a VAT Loan?

 

Speak to a member of the VAT Loans team today on 01494 956 871, or email hello@vatloans.co.uk to discuss getting a VAT loan for your business, or for more information on our VAT Loans guide.

When does a UK company have to pay a VAT bill?

When does a UK company have to pay a VAT bill?

Once you have registered for VAT, you have to submit a VAT return on either a monthly or quarterly basis. The vast majority of UK SME companies will submit their VAT return per quarter as opposed to monthly, purely from an administration perspective. Below is a bit more on when does a UK company have to pay a VAT bill?

You can choose when you would like your VAT quarter to start and end. Most UK SME companies will run their VAT quarter in line with their financial year end.

HMRC then gives you one month and 7 days from your quarter end to submit your VAT return and pay your bill. You do not have to wait until the end of this time and many companies will submit and pay their bill earlier. For those companies looking to submit a VAT repayment, they often do their best to have the VAT return in as quick as possible.

Looking at the example of a December 31st quarter end, your key VAT dates are as follows:

 

Q1          January, February, March                   VAT return to be submitted by the 7th May

 

Q2          April, May, June                                    VAT return to be submitted by the 7th August

 

Q3          July, August, September                      VAT return to be submitted by the 7th November

 

Q4          October, November, December         VAT return to be submitted by the 7th February

 

I am VAT registered and have made no purchases or sales this quarter. Do we have to submit a VAT return?

Yes, you will need to submit a return regardless. However, please note, if your sales drop to under £85,000.00 in any 30 day period and this will be the norm, you could look to deregister for VAT.

How do we pay the VAT bill?

You will ether pay HMRC by bank transfer or alternately via direct debit. You could send a cheque or have a cheque paid into a bank. However, you will need to ensure it is cleared in time.

Advice on HMRC VAT

For many UK companies, VAT is a relatively straight forward subject. However, it can quickly become complex when you take into account flat rate VAT, cash accounting scheme or annual accounting scheme. You then have different rates of VAT, standard, reduced and zero rates.

Add in Zero rated and VAT Exempt and what you can reclaim VAT on. For example entertainment costs is a no, so the whole subject becomes an area where you might need expert advice.

If ever in doubt, make sure you speak to an accountant.

Spread the Cost of your VAT

Contact Us

For more information on when does a UK company have to pay a VAT bill or for a free no obligation quote, please give a member of the VAT Loans team a call on 01494 956 871. Or email us on hello@vatloans.co.uk.

Applying for a VAT finance loan

Applying for a VAT finance loan

One question we often get asked is why does a UK company come to us for a VAT finance loan as opposed to speaking to their High Street bank? And what is included when applying for a VAT finance loan?

The reasons we hear are always the same:

Banks take too long to get a credit acceptance

They ask too many questions

They charge documentation fees

And the nail in the coffin…they will turn us down

So for us to have a business, we have to offer a quick and simple service with: competitive rates, no documentation fees and high acceptance rates.

We do not need you to fill in a long application form. We can get started with:

What is your company name and registration number?

What is the amount of VAT finance you need?

We can internally give you a reasonably good indication if we will be able to get you a VAT finance facility and what other information we will require, within minutes.

VAT finance loan decisions within 24 hours

A lot of the financial information we need is normally in the public domain at Companies House. However, to get an agreed credit facility in place, our underwriters will / may need the following information:

Management accounts – depending on the size of your business.

Last three months business bank statements.

Directors home address, date of birth details. (The underwriters do carry out personal credit searches on directors)

Sometimes other information is required, for example, details on shareholders who hold in excess of 25% of the shares.

Speed of a credit acceptance is of high importance to us. We aim to always get a decision within 24 hours from when we have received full details. Clearly, at busier times of the year this does get stretched out to two days.

A simple, quick and easy paperwork process

Documents are emailed to you. Some of our finance providers also use an e-signature facility.

How is the VAT finance paid to HMRC?

Once the paperwork is in place, our funder will send the money directly to HMRC quoting your VAT registration number. Money goes to them on a same day payment.

Repayments quoted on our VAT loan calculator

The repayment you see on our VAT loan calculator is what you will pay. The funders either accept or reject your credit, they do not offer an acceptance to higher rates.

What about using VAT finance for a following quarter?

An average customer will use a VAT finance facility three times per year. Year on year, our customer retention rate is over 80%.

The great thing is once you have made the three-monthly repayments, the funder is getting a positive profile of your credit history. Also, from an underwriting perspective, they have already undertaken a range of the checks needed. They may well ask for up to date bank statements or management accounts, but a lot of the “Know Your Customer” paperwork will have been sorted previously.

And finally…

It’s a competitive market, most of the time we will be more competitive than most of our competitors. We very rarely lose business due to rates!

Contact Us

For more information on applying for a VAT finance loan or for a free no obligation quote, please give a member of the VAT Loans team a call on 01494 956 871 or email us on hello@vatloans.co.uk.

Loans to pay VAT

Loans to pay VAT

Here at VAT Loans we have loans to pay VAT that have pre-approval in minutes and a decision in 24 hours. No messing around here!

We went onto a VAT funding competitors’ website the other day, advertising “pre-approval in minutes.” I put in our company name, VAT funding needed, my name, email address and mobile phone number. I pressed “submit” only to see the second page asking me to upload my bank statements and management accounts.

However, all I wanted was to know:

What is the cost?

Will I get cleared for credit?

So lets stop this messing round. If you are looking for VAT funding and just want to know what the cost will be, use our VAT loan calculator. We will never know who you are because we do not ask for contact information.

So how do we get a VAT funding pre-approval in minutes?

All we need is your company name and the value of the VAT bill. Using company credit information, we will take a quick look at your business. This does NOT therefore leave a credit footprint; the credit check is done in total confidence.

We have been lending money for thirty years. Our team are trained in credit underwriting. Hence, we will give you a good idea as to whether we can arrange the VAT funding facility or not.

Looking for loans to pay VAT bills for the first time?

VAT funding is a massive business in the UK. There are multinational companies borrowing £10m for three months and business’s funding £5,000.00. The main reason why VAT funding has grown so much over the last few years is that we can fund all sorts of UK companies. However, historically, VAT funding was mostly being offered only to accountants, solicitors and architects.

Scaffolding, construction, engineering, distribution, IT, media, these are just some of the sectors that are using VAT funding on a regular basis. Please do not be put off if you are looking for funding for the first time. We will help guide you through the process, which is quick and simple

If you have used VAT funding in the past

In principle you will understand the process and know the documentation is therefore simple and easy to understand. The key thing is – from what our customers tell us – competitiveness, pricing and service delivery.

Please compare our repayment numbers to your incumbent provider. Therefore, we are confident that our VAT funding pricing is more competitive than most other companies offering a similar product.

Contact Us

For more information on loans to pay VAT or for a free no obligation quote, please give a member of the VAT Loans team a call on 01494 956 871 or email us on hello@vatloans.co.uk.