VAT and Tax Loans


If you’re facing a tax or VAT (Value Added Tax) bill and can’t see a way of paying it, there’s no need to despair.

Contrary to what you might initially think, this is far from unusual and might not mean that your business is necessarily in trouble. We at ACF Direct might be able to offer VAT and tax loans to assist.

Here’s the background.

HMRC efficiency

Within living memory, the HM Collector of Taxes / Customs and Excise (as they were then called) weren’t particularly famed for their efficiency in collecting unpaid tax debts. As a result, some business adopted the bad, if understandable, practice of simply parking their tax demands until such time as they had the money to pay them or they were forced to do so by the typically sluggish legal collection processes.

In the modern world with a radically revised HMRC collections function though, that option would be distinctly risky. The tax authorities now use collection agencies and may be quick to levy fines and issue winding-up orders through the courts.

The bottom line is simple – don’t just ignore your tax bills and hope nobody will notice. They will and you will pay the price one way or another!

Your options

If you’re paying a due-by date tax demand and simply don’t have the cash to pay it, you have two main options to consider:

  • you could or perhaps should discuss your problems with HMRC. They are not ogres and while they’re under political pressure to increase revenue through efficient collection, they also have procedures to provide them with some flexibility in specified circumstances and deserving cases. These might typically be short-duration in nature;
  • using VAT and tax loans.

About VAT and tax loans

It’s something of a myth that you can’t borrow money to deal with your tax debts. In fact, with specialist help you may be able to do so.

It is typically the case of course that some conventional borrowing channels may be restricted. For example, banks may be reluctant to offer loans simply to help you to pay off tax bills because you don’t currently have the finances to do so. They may be looking for more security and less risk than that associated with debt repayment lending.

However, you might have other options open to you including what’s called equity finance. For example, that might involve you raising capital against equity you have in your property and using that to settle your tax bill. There are other innovative ways we might be able to assist you to raise money if you’re struggling with an HMRC collection demand.

What you’ll need

Providers of funds will typically want to see that:

  • there is some form of security or manageable risk structure in place to reassure them that their lending is sensible. In other words, they’ll wish to ensure that you’ll be able to repay the loan in line with whatever terms you might agree to;
  • they’ll need to be sure that your inability to pay the tax demand arises from a short-term factor that you can manage as part of your business activities – an example might be a temporary cash-flow problem. This would be quite different to a situation where your business was unable to pay the bill because it was not viable and was teetering on the brink of collapse.

Summary

Struggling to pay a tax demand is not a rare event and it can be one experienced at times by otherwise successful businesses.

Please don’t assume that such a problem means you’ve come to the end of the road because we may be able to help show you otherwise.