Financing your business' tax bills

Published on 11th April 2019

Although it’s a mandatory requirement of operating in the UK, many SMEs and established firms still struggle to resolve their business' tax obligations on time. Coupled with your other monthly expenses, its arrival places additional pressure upon your finances, which may affect your ability to operate and grow. Nevertheless, HMRC will pursue anyone who has failed to pay their business tax on time, which will result in you being taken to court and being issued with an Accelerated Payment Notice that needs to be resolved within 90 days. But if you are struggling to pay down your tax obligations, Tax Finance presents you with a number of finance solutions that could help.

Changes to the way in which business can be paid

If you’re thinking of using your personal credit cards to pay off your business tax, think again.

HMRC is no longer accepting payments from personal credit cards, which may prove an issue if you’ve got upcoming rental demands, staff wages, insurance premiums or any other expenses to worry about. Although the move is aimed to help HMRC avoid passing on the cost of credit processing fees on to the general public, it adds yet another unwelcome obstacle for SME owners. But, if you do lack the means to resolve your business’ taxes on time without resorting to your personal credit card, know that there is another way. Applying for VAT and Tax Finance could show you the way forward.

Do you have an upcoming business tax bill that needs paying? Need help raising the necessary capital? Apply for VAT & Tax Finance and learn more about how your business could benefit.

What is VAT and Tax Finance?

Receiving your business tax bill from HMRC is never a welcome sight. Although you can predict when it will arrive, it’s easy to underestimate how much it will cost. But rather than let your business struggle whilst you keep a lid on your other expenses, which could have lasting consequences, you could safeguard your business’ future with VAT and Tax Finance.

VAT and Tax Finance is a package designed to give you access to an variety of different finance solutions that could ease the pressure on your finances, helping you stay on top of them and any other obligations in complete confidence. So by choosing this package, you could gain access to anything from Merchant Cash Advance and Overdraft Replacement to Invoice Finance.

Merchant Cash Advance

A short-term, unsecured finance solution, Merchant Cash Advance enables you to receive an advance based upon your future, predicted card sales. So in order to apply, your business must have the capacity to accept credit and debit payments and you will need 3 or more of your latest consecutive sales reports. Using your reports, lenders will work out an average of how much your business earns each month. So, for example, if you generate £25,000 in card-based revenue, you could receive an advance for a similar amount, if you require it. Plus, Merchant Cash Advance is repaid using flexible monthly repayments which grants a lender the ability to automatically intercept an agreed percentage from each of card sale until the debt has been fully repaid. However, your cash-based revenue is unaffected.

Overdraft Replacement

If you’re looking to raise funds for an upcoming tax bill, Overdraft Replacement gives you access to a line of credit which provides you with an allowance based upon your previous income. Plus, you’re not required to make use of any of these funds but anything that you do use will be subject to interest and needs to be fully repaid within 30 to 90 days, depending on the agreement. Once you’ve repaid what you’ve borrowed, you’ll regain access to the allowance and will be able to withdraw and repay funds on a revolving cycle, much like a personal credit card.

Invoice Finance

Meanwhile, Invoice Finance allows you to harness the funds tied up in your business’ unpaid business-to-business (B2B) invoices. So regardless of whether the customer is late in paying up or you need the money sooner than expected, you could release up to 90% of the capital held within any invoice. In order to qualify, your business must be able to maintain up-to-date ledgers and, depending on the agreement, exercise sufficient credit control processes. Nevertheless, there are two types of Invoice Finance available: Factoring and Discounting.

  • Factoring: requires your business to have a minimum turnover of no less than £100,000. However, using this option does allow you to let the lender pursue the debtor on your behalf, whilst being confidential about the fact that you’re using their services. In addition, some lenders may provide bad debt protection as standard, safeguarding your business in the event that the debtor doesn’t pay or falls into liquidation. Once the debt has been repaid, the lender will release a balance (e.g. the remaining 10%) minus costs and fees.
  • Discounting: this requires your business to have an annual turnover in excess of £25,000 and be able to collect the debt using your own credit control procedures. Instead of the debtor paying your business, they’ll pay directly into a lender-controlled facility. Once the debt has been repaid, the lender will release a balance (e.g. the remaining 10%) minus costs and fees.

Need help staying on top of your business tax?

Every year millions of UK businesses are required by law to pay business tax if they’re to continue operating. Yet despite being a vital aspect of running your own business, it doesn’t make it any easier when the time comes. But rather than allow your business to struggle and fall into an even worse financial situation, you could take back control of the situation by applying for VAT and Tax Finance. All you need to do now is source an appropriate agreement for your business from a lender you can trust.

At Rangewell, we’re an Access to Finance specialist who have mapped over 400 lenders to offer you a comprehensive overview of more than 23,000 business finance products. Our services are free to use and we’ll also guide you through the application process. So if you’re looking to finance your next tax bill, apply for Vat and Tax Finance today or find out more with Rangewell.


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David Harrison

David Harrison

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