Paying HMRC: Tax and VAT Finance Options for SMEs

According to recent research, more than 430,000 SMEs in the UK are struggling to pay HMRC due to the escalating cost-of-living crisis, with VAT and Corporation Tax challenging firms the most.

It is indisputable that rising bills, increases in cost of materials and other issues are putting a pinch on spending, and VAT and tax bills can put pressure on cash flow, but there are a range of ways to manage those payments.

Paul Trickett, BDM at Bathgate Business Finance, said: “Using VAT and Tax finance facilities can help to spread these big lump sums into fixed manageable chunks over time, easing pressure on cash flow.  

“We have seen many businesses use these facilities successfully, yet whether businesses owners are aware of the options will depend on the advisors they have around them. It’s not commonly offered by traditional lenders, so an understanding of alternative finance providers is essential.

“This type of finance was often used by the professional services sector, where there is typically a gap between gaining the billable work, for example a case in the legal sector, and payment for the work. Professional firms not only have large tax and VAT bills, but insurance and professional licenses that require payment each year.

“Outside of the paper professions, such as legal and accountancy, where it is common practice, there can be some discomfort about taking finance for what are considered regular bills, but it’s important that business owners in other sectors know that the option is there and understand the benefits.

“Contrary to some opinion this is sensible planning and not a failure to have prepared, particularly in this challenging economy and all businesses should consider if it is the right approach for them.

“Getting the right advice is key, which is why we work with an extensive network of accountants, financial advisors and other professionals who advise businesses. If you have a corporation or income tax bill due, or a VAT payment expected, speak to a trusted advisor a month or two in advance to get plans in place early and find the best option for your business. Taking this action could allow you to cut that big lump sum into smaller payments over 3, 6 or 12 months.”

To find out more about Tax and VAT finance options, contact Paul Trickett on or call 0151 625 7323