Do you set aside some money throughout the year to cover your VAT payments? If not, you’re certainly not alone. There’s always some other pressing expenditure cropping up which has to take precedence and may draw on those precious cash reserves.
Stock purchases, seasonal turnover, unpaid invoices – these can all leave you struggling when your VAT bill is due. Perhaps you do have enough money in your account, but handing it all over in one go to pay a tax bill could leave your business vulnerable in the future.
One stark word of warning: If debts do pile up, payments due to HMRC should always be a priority. Failing to pay the VAT you owe on time could land you with surcharges and penalties running into hundreds of pounds; and the longer you leave it, the more these will escalate. The rate increases each time you default again during a surcharge period.
Fortunately there’s a perfect solution to this taxing issue
More and more businesses are turning to VAT Funding which enables you to spread the cost of your quarterly return by dividing it into three manageable payments.
HMRC gets the whole amount upfront, then you only have to draw a third of the money from your account each month to repay the funder.
Interest is charged at a fixed rate, from 3.9% of each quarterly VAT bill.
Who can apply?
All VAT registered companies with a minimum quarterly VAT bill of £10,000 are eligible. There’s no maximum limit for larger applications.
If you find this option works well for your business it can be renewed every three months if you choose, maintaining the payment as a regular monthly outgoing for as long as you need the finance.
The benefits of VAT funding in a nutshell:
- It’s quick and simple to arrange.
- The rates are competitive.
- It takes pressure off your cash reserves.
- You can retain working capital to spend in other business areas.
- Fixed monthly repayments ease cashflow peaks and troughs.
- You are not tied into a long-term contract.
VAT funding is becoming an ever more popular way to manage cashflow. Business owners may have the best intentions of saving for VAT returns and other tax obligations but often the VAT quarter comes around faster than expected.
The ability for businesses to spread VAT payments over three months instead of paying in one lump sum eases cashflow and stabilises outgoing expenditure throughout the year. If you’d like to find out more about VAT Funding and speak to a member of the team you can get in touch with us on 01274 965356 or email firstname.lastname@example.org.