Whatever your business type, we can assist you finding a finance solution that enables you to spread the cost of your VAT or Tax bill and avoid HMRC late payment charges.
Tax bills are predictable in the sense that they are coming, but that does not make them easy to manage. Value Added Tax (VAT) returns fall quarterly. Corporation Tax arrives once a year.
Both can put significant pressure on cash flow, particularly if they fall at a difficult time for the business.
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VAT and tax funding allows a business to spread the cost of these payments over a short term, rather than drawing down a large sum of cash in one go.
The tax is paid on time, the business protects its working capital, and the funding is repaid over the following weeks or months.
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What this type of funding is designed for
This is a short-term facility. It is designed to manage a specific, known liability, not to fund general business activity. The lender advances the amount needed to cover the tax bill, the tax is paid, and the business repays the funding over a fixed short term, typically three to twelve months.
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It is commonly used for VAT returns and Corporation Tax, but can also be used to spread the cost of other tax-related payments including PAYE (Pay As You Earn) and National Insurance contributions in some circumstances.
Why business use Vat and Tax funding
A large VAT return falls at a time when cash is already stretched
The business wants to protect working capital rather than use reserves to pay a tax bill
Cash flow is seasonal and a tax bill has arrived in a quieter period
The business is growing quickly and tax liabilities have increased faster than expected
What to be aware of
Tax funding is a cost. There will be interest and fees to pay on top of the tax liability itself. For most businesses, the cost of the funding is outweighed by the benefit of protecting cash flow and avoiding pressure on the business. But it is worth understanding the full cost before committing.
Tthis facility is for managing tax payments, not for deferring tax indefinitely. If a business has significant tax arrears or is in dispute with HM Revenue and Customs (HMRC), the situation may need a different approach and independent tax advice first.
Is this right for your situation?
This is likely to be relevant if:
A large Vat return falls at a time when cash is already stretched.
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You want to protect your working capital rather than use reserves to pay tax in one go.
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Your business is growing quickly and tax liabilities have increased faster than expected.
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Your cash flow is seasonal and a tax bill has arrived in a quieter period.
It may not be suitable if:
Tax arrears are already significant and the underlying issue is the business's ability to meet its tax obligations
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You are looking for a long-term borrowing solution rather than a short-term spread of a known cost​​​​
This type of funding is designed to manage a known tax liability over a short term.
It is not a long-term answer to wider tax or trading problems.