Yes, it’s inevitable that businesses have to meet their tax and VAT obligations, but it is a familiar feeling for business owners in January and April when there simply isn’t enough cash in the coffers to settle their tax bill.
But fear not, there are options available for business owners so that you can avoid those late payment penalties or the dreaded chaser letters dropping on your doormat.
Whatever your position, it’s important to meet these obligations on time or face HMRC penalties. Late payments can lead to anything from accelerated payment notices being issued, court summons and in some cases jeopardise the future of your business. Things can quickly spiral out of control so it’s best to avoid such issues and where necessary make use of the finance options available.
VAT and tax finance
There are a whole host of finance options available to help businesses honour their tax and VAT commitments on time. Here’s three ways you can borrow:
1. Revolving Credit Facility
A revolving credit facility is a bit like an overdraft. You have a limit, you draw and repay as you wish and only pay for what you use. Perfect for short term expenses such as paying your VAT bill.
2. Unsecured business loan
A business loan allows you to borrow money over the short and long term with a structured repayment profile. For requirements under £100k, such as funding tax payments, taking out unsecured finance often makes more sense than providing property as security. After all, unsecured business loans can be arranged in days, whereas secured loans usually take 6-8 weeks.
3. Business credit card
For short term requirements such as paying your VAT bill a business credit card can be a neat solution. It’s super-quick to arrange and get’s the job done with minimal fuss.
Get up straight
Let’s face it, HMRC don’t look too kindly on businesses who are late with their payments. With that in mind business owners must be on the front-foot and either maintain the necessary cash reserves or find a suitable borrowing option.