Keeping the taxman out of your breweryPublished on 31st December 2019 2019-12-31T12:00:00+00:00
£40,000 tax finance - and £10,000 working capital
Tax bills should be predictable and your business should always be able to prepare for them - but things do not always go to plan. VAT is a regular drain on cashflow - but the real problems can come at year-end when a big corporation tax bill can mean a major cost to cover.
At Rangewell, we know the lending solutions that may be available when a business faces problems with tax - and we can work with you to deliver the answers your clients need.
We recently helped secure £40,000 of funding for a brewer who had run into a major funding problem when a problem with HM Revenue and Customs triggered a funding crisis.
Our client was a small brewer with a base in Hertfordshire, with a growing business supplying bars and specialist retailers across the country and into North London. The owner had been running the business as a sole trader for several years and had been advised to make the change to limited company status.
“It was a sign of being a grown-up company, and my accountant explained the tax and other advantages to me. The trouble was, I don’t think I was listening closely enough when he did.”
He believed that the change in status would be problem-free, and expected to continue to receive support and funding from his bank. However, as a limited company, his business was liable for corporation tax and he found that it owed £40,000 to HMRC at the end of their first year.
“I should have seen this coming - but somehow I had overlooked the obvious need to set aside funds to pay the bill. I had been hands-on with the business, and paying the VAT was about as much as I could manage.”
He was confident that his bank would continue to support the business and approached them to provide funds to cover the tax bill. But there was a problem. They also needed to raise cash to support their business plans.
“We wanted to invest in marketing and publicity, a website and more. It was all adding up to a major cost - but as a profitable business we did not believe that we would have any difficulty raising the money.”
The problem came when they approached their bank - who ran a credit check as part of their approval process. When they saw that the business owed money to HMRC, the bank's systems immediately vetoed any possibility of a loan.
“We were caught. We could not raise the cash we needed to make the most of the business because we had an outstanding tax bill, and because we had applied for Working Capital Funding, the bank saw it as evidence the brewery was in trouble, and would no longer consider us for funding for the tax outstanding.”
Time was running out - HMRC charges substantially for late payments - and the advisor approached us at Rangewell to provide help.
How we helped
We saw that a Business Tax Loan would be the simple way to ease the impact that a big tax bill would have on the business. It can help deal with an annual tax bill when it is an emergency and spread the cost into more manageable monthly payments.
This means that you no longer need to tie up capital to pay tax - you can use it to run and grow the business.
We can find you lenders who specialise in tax funding who can provide funds in under 24 hours, and can pay funds directly to HMRC if required.
We secured £40,000 as a Tax Loan at 10.45% - and arranged to pay it directly to HMRC
But we didn’t stop there. We saw that, with the tax bill paid off, there was nothing to stop our client securing the working capital he needed to build his business - and set about arranging the most affordable way to provide it.
At Rangewell, we can work with you to provide the full range of commercial finance for your brewery business. Whether you need loans, Asset Finance, Commercial Mortgages, or any other kind of finance - our expert teams find the most appropriate funding solutions and the most competitive rates.
Simply contact us, we don't make any charge for our services to you and your growing or start-up microbrewery business.
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