VAT Loan guide

VAT Loans: A guide

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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 [email protected] 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?

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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 [email protected].

Applying for a VAT finance loan

Applying for a VAT finance loan

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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 [email protected].

Loans to pay VAT

Loans to pay VAT

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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 [email protected].

Spread your HMRC VAT bill over three months

Spread your HMRC VAT bill over three months!

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Did you know, you can spread your HMRC VAT bill over three months via a VAT loan from VAT Loans?

Many SME business owners will ask us “why does a VAT loan product actually exist? Surely, a business has collected in VAT revenue and the money has been put aside for paying the bill three months down the line.”

It can be simply that your purchases and sales invoices are out of synch. We see this ourselves where at the end of the month, our sales team are keen to invoice deals but then we might get the rent bill or other large expenses in the first week of a new VAT quarter. Again, taking our company as an example, we have some large unpaid sales invoices going back to a prior VAT quarter. We have to pay the VAT but have not received the cash in yet.

Simple budgeting for a HMRC VAT bill

Solicitors are one sector of UK companies that regularly use VAT business loans. We asked one solicitor why do they take out a VAT loan? Their answer was quick and simple, they wish to pay their VAT bill like they would their rent, rates or salary costs, i.e. on a monthly basis as opposed to a quarterly basis.

Architects also are enthusiastic about VAT bill loans. The Finance Director of one architect practice we work with explained. “On average, we will fund three VAT bills every year. In the last 15 months, we have funded £425,000 of VAT and Corporation tax bills via VAT Loans. For us it’s a guaranteed extension to our bank overdraft facility. We do not have to ask our bank for an increase in the overdraft facility with the charges and time this takes. We just budget to repay the VAT loan every month as opposed to setting aside money on a quarterly basis.”

VAT funding is a positive way to borrow

If you are not making sales, then you have no VAT to pay to HMRC. The fact you have a VAT bill to pay is a positive thing. The fact that you wish to pay your VAT bill on time is equally positive. Its show you have confidence in your business. It may be you have been buying stock or in the case of architects, solicitors and accountants, you have work in progress or are generous with client payment terms.

VAT Loans and the banks we fund VAT loans through follow this logic. This is reflected in the low amount of bad debts experienced in the VAT funding sector. To date, we have not had one bad debt from clients undertaking a VAT loan.

Our doors are open to all UK companies that want to finance their VAT bill.

Contact Us

For more information on how to spread your HMRC VAT bill over three months 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 [email protected].

Top 10 Tips for VAT business loans and funding

Top 10 Tips for VAT business loans and funding

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Many UK business owners dread that time every quarter when the VAT bill falls due. It’s that lump sum of money which for many companies has aided cash flow in the previous three months and now needs to be turned over to HMRC. Ironically, for many companies, the more VAT you pay to HMRC, the better your business is doing. Below are Top 10 Tips for VAT business loans and funding:

  1. Keep cash aside in a separate bank account to cover HMRC tax payments

It’s such a simple idea why does not every company do it? Every month work out what VAT and Corporation Tax needs to be paid and save the money in a separate bank account.

Business owners say they “have put money aside” but few if any hold a separate tax bank account.

So rather than this being a tip, our tip is to calculate your monthly VAT payment and keep a running total of what cash you need to pay the VAT bill.

  1. Pay HMRC every month

Now this is a much better idea. HMRC run different bank accounts for PAYE and VAT. There is nothing stopping you working out your monthly VAT owing and then sending HMRC a bank transfer every month. There are some great benefits to this, and the only downside is the loss of interest you would have had on holding the money.

  1. Submit your VAT return as quickly as possible

If you are looking for a VAT reclaim, then it is important – for your cash flow – to submit the VAT return as quickly as possible.

If you have to pay VAT over, then there is nothing stopping you completing the return ASAP as well. Regardless as to when the return goes in, you still have one month and 7 days to pay the money from the date of your quarter end.

The VAT bill will have to be paid. Understanding exactly what your VAT bill is early on helps you plan how you will pay it.

  1. Borrowing money is cheaper than paying a HMRC fine

HMRC VAT late payment fines and rates are clearly documented on the www.gov.uk website. Those brown envelopes – which arrive through the letter box of thousands of companies every month – always have the sting in the tail of the fine, up to 15% of your VAT liability.

Taking out a loan, is usually significantly cheaper than paying a fine.

  1. Think about when you raise a sales invoice

We tend to stop raising sales invoices of any significant value at the end of a VAT quarter. We delay these invoices for a week or so, hence pushing forward the VAT element for a further three months.

  1. Always pay HMRC some money

If you do not have the money to pay the bill, then this will incur a fine from HMRC. It will start a process most of us would prefer not to go through. Pay them something, show willingness. It will not change a fine but may help when it comes to how HMRC deal with your case.

If you do decide to go down this route, tell HMRC as soon as possible what is going on.

  1. Do not use your bank for a short-term business overdraft or overdraft extension.

High Street banks will often charge a 1% fee for arranging an overdraft even if the need is only for 30 days. Leaving that aside, you need to understand how often your bank can aid you with an informal overdraft. HSBC for example, limit some companies to only four overdraft extensions per year.

  1. Use a specialist VAT loan funder for part or all the VAT debt

If you owe HMRC £50,000 in VAT and have £25,000 spare, just look for a £25,000 VAT business loan over three months. You do not need to fund the full amount.

  1. Do not go to your normal sources of finance

Keep your bank, your friends/family and other finance providers facilities available for other business loans and funding. As soon as you start using an existing contact for a VAT business loan, they cannot be used for other requirements you might have.

  1. Start the process of getting a VAT business loan today!

We look to get our customers credit approved within 24 hours and paperwork can be emailed over very quickly. We have instances where from an initial VAT business loan conversation to having HMRC being paid by clear funds takes less than four days.

It’s always best to get the credit acceptance in place and paperwork signed. Even if you sign the document a month early, the payment will be delayed until nearer the due date. Hence pushing back the first repayment date.

Contact Us

For more information on top 10 tips for VAT business loans and funding 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 [email protected].

What is a VAT loan

What is a VAT loan?

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As a business owner with a turnover above £85,000, your business must be VAT registered. Every three months your business will require you to submit a VAT return to HMRC, even if you haven’t got any VAT to pay or reclaim.

Having monthly outgoings such as rent, wages and supplier payments can make it difficult to pay your VAT bill. Therefore, VAT loans are put in place to provide your business with the funds to keep your cash flow steady.

When do you need to pay your VAT off?

Once you have received your VAT bill, HMRC allows five weeks to pay it it from the date it becomes due at the end of each quarter. With other outgoings, as mentioned before, it can be a struggle to pay it off. However, if it is not paid HMRC can act against your business – particularly if it is reoccurring. Therefore, VAT loans are an opportunity for businesses to keep all finances steady whilst invoices are being paid by customers.

What is the VAT loan process?

When applying for a VAT loan with VAT Loans we pay HMRC directly. This takes the pressure off you to have to get that payment made on time. Then, you will have monthly repayments based on your bill, which is required to be paid in three months.

Here is a step by step guide of the process when applying for a VAT loan.

Bridging VAT Finance process wheel

Now having learnt all the basics of ‘what is a VAT loan’, your business can benefit from taking the strain off the business’s cash flow.

Contact Us

For more information on what is a VAT 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 [email protected].

VAT Loans For Professionals

VAT Loans For Professionals

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As a business owner expenses come from all different directions, including your VAT bill. VAT returns are every 3 months where you submit a VAT return to HM Revenue and Customs. It is compulsory to do so, even if your business has no VAT to pay or reclaim.

If your company is struggling to pay your VAT bill on time, due to unpaid invoices by customers, we can help you. Your VAT bill will be spread across 3 monthly payments, making it more manageable whilst your collecting business from your customers.

What are the benefits of VAT loans for Professionals?

Bridging the gap – Taking out a VAT loan will ensure that you are able to pay your bill. Within any businesses unexpected fees do arise, and usually take priority. Therefore, taking out a VAT loan will take you and your business out of a sticky situation. Having this short-term loan can be the resolution of keeping your business cashflow looking healthy.

Peace of mind – VAT loans help you plan your business finances and can take of the strain.

Hassle free – When taking out a VAT Loan the payments are made directly to HMRC. The payment is made very quick and efficiently and doesn’t require you to do anything once the approval has been made by the funders.

Saving working capital – Getting a VAT loan enables your business to retain working capital for other business opportunities. For example, you maybe recruiting a new member of the team and they need to attend external training programmes. You can invest that money in your employees and use the VAT loan to cover the quarterly bill.

Contact us

For more information on VAT Loans For Professionals 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 [email protected]. We will be in touch shortly.

Braemar Finance

Braemar Finance | VAT Loans

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Despite Braemar Finance specialising in asset finance, they are one of our primary competitors in the provision of VAT Loans. Much like our relation to WestWon, Braemar Finance is part of a larger company- Close Brothers Plc. Close Brothers is a well established UK based merchant banking group. They are listed on the London Stock Exchange and are even a member of the FTSE 250. Close Brothers was established in 1992. They then acquired Braemar Finance in 2000. Managing Director, Aileen Boyle, played a key part in making this a smooth transition.

However, different to us, Braemar Finance provides finance solutions to both businesses as well as individuals. Their finance options include: Business Loans, Personal Loans, Tax Loans, VAT Loans, Hire Purchase, Leasing and Consolidation and refinancing loans. Additionally, Close Brothers have a selection of subsidiaries that offer a range of financial support to both businesses and individuals. These include: wealth management, savings, securities, customer finance and asset finance.

 

Healthy competition

Competition is always healthy for businesses. It empowers businesses to strive to their greatest potential. This is also a positive thing for the consumer. It allows them choice, as well as being provided with better quality customer service and competitive pricing.

Braemar Finance is also a big competitor for our parent company WestWon’s dental division. They also specialise in providing finance for optical, accountancy, pharmaceutical, veterinary, legal, medical, and memorial sectors.

Obviously, our job is not to endorse our competition. However, we have a strong company ethos of never speaking negatively of those companies kindred to us, like Braemar Finance. And we do believe in giving praise where it is due! This is why we wish Braemar Finance the very best in all their endeavours in the future. We hope to see much more of them in the years to come and wish to keep them as a strong competitor of ours for many more.

 

Interested in spreading the cost of your VAT?

Should you want to obtain a quick competitive quote for your VAT Loan, please don’t hesitate to get in touch. Give us a call on 01494 956 871 to explore your options with a friendly member of our team. Or, drop us an email to [email protected] and member of our team will be in touch with you shortly.

overhead relief

6 Simple Steps Towards Overhead Relief

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Are your overheads getting the better of you and your business? If yes, this blog might prove useful to you. Just follow the steps below for overhead relief. I will be listing 6 effective ways by which you can reduce your overheads and improve your cash flow.

Firstly, you might be wondering what an overhead actually is. Put simply, an overhead cost is a running cost of your business, also known as an indirect cost.

These can include:

  • Office rent
  • Office utility bills
  • Workplace repairs
  • Insurance
  • Office equipment and furniture
  • Employee salaries
  • Telephone bills

… the list can go on and on. See more on overhead relief below.

Here are some top tips on reducing these:

Review

Firstly, ensure that you are keeping on top these expenditures. Review them monthly and make sure that all costs are necessary. So, cancel that subscription you no longer use, and it may sound harsh, but sack that slacking employee! Eliminate what no longer brings value to your business or employees.

Shop around

Once you have differentiated between the essentials and non-essential business expenses, you can now start to seek out cheaper alternatives. Just because you have been a loyal customer to an overpriced printing and stationery supplier for years now, does not oblige you to passively stay and not check prices elsewhere. It may only be a small difference in price, but all these small costs accumulate, especially if this is stock that you frequently require, and purchase large quantities of throughout the year.

Negotiate where you can

Following on from my last point, it always feels good to get a bargain. Therefore, it is important to try and negotiate where it is reasonable to do so, especially if you are a returning customer who gives them a fair amount of business. As you have probably been told before, if you don’t ask, you don’t get.

Outsource

As an alternative to hiring new employees, you can look to hire an external company to do these jobs on a required basis. This is commonly done by businesses for jobs such as website development, HR, bookkeeping, and even marketing. Outsourcing allows companies to remain focus on the core of the business by having these important, however, time-consuming aspects of the business handled for them by specialists.

If possible, take advantage of remote working

The pandemic forced many office-based companies into a virtual realm by which many have chosen to remain. By embracing this innovative way of working, you can wipe out many of your overheads. Think about it, many of your overheads are connected to your physical office: rent, utilities, repairs. And undoubtedly, by shifting to working remotely, will scrap the need for an office as whole. Not to mention, you will also contribute towards the planet’s carbon reduction as you will be saving your employees their daily commute- which most likely entails the burning of fossil fuels. Additionally, if you are currently covering your employees’ travel expenses- you would be saving on that too.

Go paperless!

This is an easy way to save your costs as well as the planet. Here at VAT Loans we have been a paperless office for several years now. It has saved us a lot of space and money. We have done this by uploading all files and documents up onto a network drive. Think of all the storage in your office that is consumed by ever-growing piles of documents. This can now be freed and put to better use. Or potentially, this free space can now be sublet to get your cash flowing with more ease.

Contact Us

Are your overheads weighing you down? Did you know that business loans are an effective way to ease up your cash flow? Contact us today to find out more about your business loan options here at VAT Loans. We offer a variety of business loans. So, from corporation tax and working capital, to dilapidation and insurance loans, we’ve got you covered with your overhead relief. Give us a call on 01494 956 871. Or, drop us an email to [email protected].

CONTACT US

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CORPORATE INFORMATION

© 2023 Tax Funding Limited T/A VAT Loans

The Financial Conduct Authority (FCA) regulates financial services in the UK and you can check this on the Consumer Credit Register by visiting the FCA’s website here or by contacting the FCA on 0800 111 6768. Tax Funding Limited T/A VAT Loans is a credit broker and not a lender. VAT Loans companies deals with a range of lenders. All VAT Loans’ companies hold a current Data Protection Licence. These details, together with our policy on Treating Customers Fairly, Complaints Policy and address details are held under our Get in Touch page.

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