Article
Written by Tessie Van Woerden
Posted on 03/11/2017

5 Tips for Financing a VAT Loan

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With all of the business expenses you're already paying, it's not a surprise when businesses are late to pay their taxes. Especially paying your VAT taxes.

If your company is having trouble paying taxes on time, a loan can help cover your tracks and get you started on a new path. A loan also helps to prepare you for all impending payments and how to better save for them.

If you're considering taking a loan to help pay business taxes, here are some tips for financing a VAT loan.

1. Paying For Your VAT Bill With A VAT Loan
VAT, or Value Added Tax, is most commonly taxed on goods and services. When you have a company that sells goods and services, it's best practice to tax VAT on your products.

This is only a requirement when you earn more than 85,000 pounds, but it's a good idea to start paying VAT taxes before that threshold, especially for small businesses.

You can tax the 20% on your products, save that money and pay to the government every year. But if you're having trouble making the amount due, you can take out a loan to prevent late payments.

2. Reasons To Take A Loan
The main reason you take a VAT loan is when you can't pay your VAT tax on time. But there are other reasons why this loan is beneficial:

  • Company loses revenue before VAT bill is due
  • The VAT tax affects a limited company
  • When businesses have odd payroll periods and lose money by paying employees
  • When a business pays a leased property less frequently than normal

3. The Loan and Paying Your VAT Bill
By law, you submit a VAT return every three months. But you do have options. You can either set up a plan to pay your VAT tax every three months and have it rolled over your loan. Or, you can spread your loan a full year.

Taking a loan helps be sure you're paying your VAT tax and are doing so on-time.

4. HMRC and Late Payments
What if you have a VAT loan and are still having difficulties paying on time? The HMRC can help.

First, you have to prove that you're having issues paying your bill. The HMRC is specifically looking for poor and lack of cash flow.

The HMRC usually helps by increasing the amount of time needed to pay your VAT tax.

You will make monthly payments for a year. But if you don't pay, they will cancel the benefits and will charge you penalties. The HMRC may even take you to Court.

5. Always Prepare for the VAT Bill
While taking a loan helps you pay off your bill, it's always beneficial to remember to always save. You'll have to pay your VAT bill, but you'll also have to pay off your loan.

Be sure you always receive regular cash flow, and you're saving more than spending.

Need to Finance a VAT Loan?
It's difficult to control your spending and saving when you have to pay so many bills. Your VAT bill can put a damper on the financial health of your business. If you get caught up in late payments, take a loan to help you pay your bills.

Need to take a loan? Our VAT loan program has many benefits and we're willing to work with what's best for you.