As part of the government support package to help businesses during the Coronavirus pandemic, UK VAT-registered businesses were given the option to defer VAT payments until March 2021.
Business Finance V4B has continued to offer business loans to cover VAT payments throughout the pandemic, enabling SMEs to invest cash in other business areas and prevent a large bill next spring as deferring VAT payments until 2021 could lead to further cash flow problems next year.
By agreeing a short-term loan, such as a three to 12-month facility, businesses can free-up cash to invest in new assets or develop the business further.
Cash flow enhancement has helped many of our clients progress, we deal with large scale multi-national corporations as well as smaller niche businesses and fund millions for VAT payments every year.
WHY USE VAT FUNDING NOW?
- Three-month rolling facility
- Fast response on eligibility – in as little as 24 hours
- Relieve cash-flow pressure
- 95% acceptance rate
- No large payment due in 2021
- Avoid impact on credit file due to a drop in lending
- Dedicated account manager
- Broker access to a large panel of lenders
More than two million businesses qualified for the VAT deferral scheme launched in March, equating to almost £30 billion in deferred payments. The three-month scheme, which ended on 30 June, saw many businesses deferring VAT payments until next March.
The scheme was optional and if businesses have chosen to defer VAT payments because of COVID-19, payment of the deferred VAT must be made on or before 31 March 2021. HMRC will not charge any penalties or interest on deferred payments.
TO DEFER OR NOT?
If you are one of the businesses which took advantage of the deferral scheme you can continue to make payments as normal during the deferral period to prevent a backlog of bills next spring.
Business Finance V4B is urging companies which have opted to defer payments to make additional payments before the 31 March 2021 deadline if possible.
As lockdown restrictions continue to ease businesses could face additional cash flow problems in March next year as the additional repayments will be due.
HMRC has launched a Time to Pay (TTP) scheme for businesses which are unable to pay VAT. However, HMRC will want to see evidence that your business has been unable to raise funds elsewhere before providing support.
Government funding through the Coronavirus Business Interruption Loan Scheme (CIBLS) scheme has allowed some firms to continue trading and provided much needed cash flow during the pandemic. Read more about the CIBLS scheme HERE.
Accredited brokers on the scheme, such as Business Finance V4B have arranged business loans for thousands of companies across the UK.
VAT funding is a way to manage cash flow, however, some businesses will be unable to borrow the full amount required in 2021 due to demand or credit worthiness.
If VAT payments are deferred the amount paid next March could be significantly higher than regular VAT instalments. This could impact the likelihood for acceptance to funding, depending on circumstance and history.
HOW TO REVERT TO REGULAR VAT PAYMENTS
Some businesses may have opted to defer VAT payments until 2021 but this is not a permanent measure. If funds become available or you decide to finance your VAT bill through a provider such as Business Finance V4B, HMRC allows a change to normal VAT instalments at any time.
Businesses can apply online to request to change to monthly VAT returns. Visit GOV.uk and search for “change VAT details.”
If you have deferred your VAT payment, are concerned about meeting VAT payments or would like more information on VAT payments call Business Finance V4B on 01978 668939 or email firstname.lastname@example.org