Latest research shows that UK businesses owe almost £2.6 billion to HMRC in overdue VAT payments, up from £2.55 billion in 2014. This figure has remained consistent in recent years, despite the improving economic climate.
Our Managing Director, Peter Alderson explains that one of the biggest factors is likely to be the fact that businesses are waiting longer to receive payment from suppliers – currently standing at around 72 days. Should a client pay late, the business is still expected to pay VAT on those invoices, despite having less cash available to do so.
More companies are also taking advantage of the economic recovery and increasing capacity via investment in staff, equipment and infrastructure, and as a result, payment deadlines could easily be overlooked.
The present 20% VAT rate may also be having an effect, as it now represents a significantly larger tax consideration than pre-2011.
Peter adds that essential expenditure such as tax or vat, should not have to compete with businesses’ plans for growth, or have any significant impact on cashflow. Careful planning can ensure investment to expand and demands from the Revenue can be managed side-by-side.
And we've certainly seen an increase in the number of businesses choosing a VAT loan to finance payments. Customers can choose whether they wish for payments to be made directly to HMRC on their behalf, or to the clients account, but ultimately freeing up capital for other business requirements.
For more information on how we can help you manage your tax bills with a no-fuss business loan, please make an enquiry or call us on 0330 058 0836.