VAT lending

The business landscape across the UK has seen a vibrant surge in the past 12/24 months. This in turn has naturally seen an increase in VAT bills. As revenue increases so does the amount of VAT charged so it is important that a business can budget accurately and ensure they take in to account their VAT payment obligations.

To help businesses manage cashflow, especially when VAT payments are due, there is an opportunity to use VAT lending or VAT loans. Previously this was a very popular choice for professional services such as law firms or accountants. However, there has been a noticeable shift and businesses from an array of different sectors are now taking advantage.

There are several benefits to be had when taking advantage of VAT lending:

• Companies can maintain a healthy cashflow. They can keep money in their bank to help with other business needs and not having to worry about paying a large lump sum to cover their VAT obligations
• As a VAT loan is a specific form of lending, a business will also be able to take advantage of other types of lending with no negative connotations.
• Payment of VAT bills can be made immediately and the lender can even make payment directly to HMRC
• The application process is a relatively simple one and approval can take as little as 2 to 3 days.
• Repayment is based on a monthly, well-structured basis until the entire debt has been repaid. Once completed a new VAT lending facility can be arranged.

There are also some interesting financial solutions available around VAT, two of the most popular are:

1. When purchasing an office, it will be subject to VAT. The value of VAT can be sourced through a lender on the provision it is repaid within a 4-month period. During this time a VAT claim can be made through HMRC which in turn can be used to pay off the debt.
2. If a substantial asset is being purchased, then a business can make a request to defer the VAT for a 3-month period. A lender will not pay the VAT so a deferral can be made whilst the business makes a claim through HMRC.

In summary any business registered for VAT can take advantage of VAT lending.

If you have any questions around any form of VAT funding, then the NGI team are on hand to help. For more information, please call us on 01993 706403 or e-mail enquiries@ngifinance.co.uk.