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Frequently Asked VAT Loan Questions

November 26, 2020

Q: What is a VAT loan / VAT Funding?

A: All VAT registered businesses pay a quarterly VAT payment to HMRC. This can be burdensome and a strain on cash-flow. Having chunky quarterly payments going out is also a-typical to normal business cash-flow which runs month to month. Using a tailored funding solution to solve this, with a monthly repayment option is a method to smooth out the cash-flow.


Tax Cartoon

Q: How do VAT Loans work?

A: In essence, the solution is turning what would be a Quarterly payment in advance, into a monthly payment in arrears. Business VAT is paid (by the funder) upfront. Repayments are set equally in 3 monthly installments, with the first payment not due until the following month. Repayments are set typically on days 30, 60 and 90 – completed prior to the next VAT payment falling due and allowing businesses to roll over the funding each quarter if they choose to do so.



Q: Am I obliged to use the VAT funding each and every quarter?

A: Short answer is No. You can pick and choose when it suits your own situation to use the monthly repayment option. However, most businesses find that the solution works so well that they choose to roll the funding over each quarter as a matter of course.

Q: How much can I borrow?

A: VAT funding ranges from £5000 and has no upper limit. However, it is likely that any business whose quarterly VAT payment is in excess of £1,000,000 would move to ‘Payment on Account’. We can still arrange funding options for businesses who ‘Pay on Account’ as there is still a quarterly shortfall that needs to be balanced.


Q: How long does it take before I can get a decision on my VAT loan?

A: Applications typically take between 24-48 hours. Once approved, we use a simple e-sign document and transfer funds on the same day.

For renewals in most cases, there is an automatic approval process which improves turnaround time and reduces the admin process.

Q: What much does it cost to spread my VAT payment?

A: Interest rates start from less than 2%. Some funders charge a nominal fee although this is negligible, usually around £70. 

Q: What kind of businesses would use a VAT loan?

A: In terms of industries we work with all SME and Professional businesses. Really the funding is available for any business who pays VAT. Any business that is seasonal by nature, or suffers from cash-flow concerns would benefit from using this product. Likewise, any business that depends on cash to fund its growth would find such a low cost, high cash-flow benefit facility to be useful.


Q: Are funds transferred to my business or HMRC directly.

A: Typically the VAT funders would prefer to pay HMRC directly. Upon approval, they would like to see a copy of the VAT return and would transfer that amount straight to HMRC on your behalf. If for some reason this doesn’t work, speak to the JPM team who can come up with a tailored solution to ensure funds are paid directly to your business rather than to HMRC. Although most businesses like the payment going straight to HMRC this is not usually a problem.

Q: Do I have to fund my entire bill, or can I part fund?

A: Absolutely part-funding is available. There is no requirement to fund the full amount, you have complete flexibility to fund as much or as little of the bill.

Q: When does HMRC require the VAT to be paid? 

A: If you pay your VAT monthly or quarterly, the deadline for submitting your return and paying any VAT you owe is one calendar month and seven days after the end of the VAT period. 

Q: Can I spread my VAT payment over a longer period than 3 months?

A: Yes. Although we do not advise this and the specialist VAT lenders will not allow this there are circumstances which could mean a business would prefer a 12>36 month repayment option – which we could arrange.


Q: Can I finance my VAT bill after I have paid it? 

A: Yes, you can finance your VAT bill up to 14 days after you have paid it

Q: Can I fund an overdue VAT payment?

A: It depends on how overdue… Typically we can fund an overdue VAT bill up to 14 days after the due date.

Q: I have been rejected for a loan before, can I still apply?

A: Yes. JPM are an FCA registered Credit Brokerage with access to the entire market. This means we can obtain the cheapest terms in the market, but in some situations i.e. bad credit / loss-making accounts, we would also have access to funders who consider different circumstances – although they may not necessarily be the cheapest we will always endeavour to find a solution for most circumstances.


Q: How do I apply for a VAT loan/funding? 

A: Contact the experienced JPM team today who can talk you through the process, information required, and provide you with a tailored quote so you can factor the pricing into your decision making.

We will only request essential info and ensure the application process is as smooth as possible.

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The Problems with VAT Payments

October 21, 2020

Problems with VAT Payments for Businesses…

What happens if I don’t pay my VAT? 

There are a number of problems with VAT payments for businesses. This is because failure to submit VAT payments by a business is not taken lightly and will have a direct financial impact on the company. 

It is a business responsibility to file their VAT return online and make electronic payments on time. Consequently, a business can accrue substantial penalties from HMRC should they fail to pay their VAT. While there is typically no financial penalty for a first offence, failure to pay can result in a surcharge liability notice. Failure to pay your VAT again will result in a penalty charge, which will increase your business costs – a devastating effect for a company that is already struggling financially. As stipulated by HMRC, “You will have to pay a surcharge if you do not pay on time.”

For this reason, it is essential to make arrangements to manage your cash-flow problem to avoid a late VAT payment. Contacting HMRC once a company has recognised this issue is a fruitful starting point, or contacting a firm that can assist with any cash-flow problems can also help prevent the onset of costly penalties accrued by late VAT payments. Here’s how…

The benefits of professional services for VAT funding

Despite the previous negative perceptions attached to VAT funding, businesses are increasingly discovering their efficiency in managing cash flow. 

This shift in perception can be attributed to both pressures with regards to VAT payments, as well as the increasing difficulties businesses are experiencing with juggling cash flow problems, a factor that will likely be exacerbated by the current global pandemic. 

Consequently, thinking about cash management ahead of time can ensure that you are prepared for recurring payments and do not have to worry about incurring substantial fines  that could put your business out of practice. Considering VAT funding can improve your business proposition and allow you to navigate your way through various peaks and troughs. 


Indeed, businesses should not be restricted by VAT payments. Access to VAT funding facilities can enable expansion within a business, whilst managing regular HMRC payments. VAT funding is a fruitful way of managing this recurring expense while releasing internal capital within the business by spreading the VAT payment over the following quarter. 


JPM VAT Funding

VAT funding has become an extremely popular service among professionals. Whether it be in the corporate or the health sector, professionals are embracing the flexibility synonymous with VAT funding. 

At JPM Capital, we have provided thousands of VAT funding solutions for a variety of clients, enabling them to manage the peaks and troughs of cash flow and combat the cyclical nature of VAT payments, whilst allowing them to grow their business – even during economic hardships. Our specialist VAT funding facility can effectively turn a quarterly payment in advance and we will allow you to plan ahead and make sure there is enough working capital within your business for the VAT payments.

Call us today to find out how we can help!


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COVID-19 and VAT Funding

September 5, 2020

COVID-19 and the effects on VAT Funding

The global pandemic has caused major social and economic disruptions. As such, the government has announced a large and wide-ranging package of financial measures to try and cushion the effects on both people and businesses at large.  

As you will already be aware, one of the measures put in place was the VAT payment deferral measures. Deferral of VAT payments were rolled out by the government to support businesses with cash flow during the pandemic between 20th March 2020 – 30th June 2020. 

Consequently, If you’re a UK VAT-registered business that uses the government deferrals of VAT, you have until 31st March 2021 to make the payments. Until then, HMRC will not make any penalty charges or interest on pending VAT payments that you have payments you have deferred between 20th March and 30th  deferred. 

However, any VAT payment should be paid in full on or before 31st March 2021. In order to do this you must; 

  • set-up cancelled Direct Debits in enough time for HMRC to take payment
  • continue to submit VAT returns as normal, and on time
  • pay the VAT in full on payments due after 30 June

What you need to do to get VAT funding

If you have cancelled your Direct Debit to HMRC to take advantage of the deferral, you will need to set up a new Direct Debit arrangement in time for the first payment after 30th June.

Payments due after 30th June must be paid in full as normal and you must continue to file your VAT return on time.

Paying the tax that you have deferred

If you choose to defer your VAT payment as a result of coronavirus, you must pay the VAT on or before 31st March 2021.

Businesses can start to make payments towards your deferred VAT now or on an ad-hoc basis any time now and then. 

How to get help

If you need more help to pay your VAT, you may be eligible to get support with your tax affairs through HMRC’s Time To Pay (TTP) service. This allows you to pay off your debt by instalments over a period of time. 

Getting back into the swings of VAT payment may be confusing and hard to maintain, particularly after a period of deferral. At JPM capital, we can advise you on your VAT payments and our specialist VAT funding facility can effectively help turn a quarterly payment into a monthly payment in arrears. Our team can deal with all the necessary red tape and information required to process applications, saving you time to focus on your business needs! 

With a dedicated account manager who can handle your VAT applications from start to finish, you can rest assured knowing your VAT payments are dealt with on time and on a regular basis. 

For more information, sign in our contact form or give one of our friendly staff a call today. You won’t regret it! 


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VAT Funding Processs

August 10, 2020

What are VAT/Tax Returns and how do they work? 

As a business, you are required to submit a VAT return to HM Revenue and Customs every 3 months, even if you have no VAT to pay or claim. 

Businesses who owe VAT to HMRC can choose to fund the bill once or twice a year, or alternatively, the most common method is to finance each new quart VAT return throughout the year. 


What is a VAT loan or VAT Funding? 

Paying VAT is not always a viable option for some businesses whose cash flow and capital can be limited to pay quarterly bills. This can be a disconcerting feeling for a vast amount of individuals, knowing that they owe a government organisation money. Forfeiting on the payment or being late is non-advisable and will most likely render strict enforcement actions by HMRC themselves.

This is where VAT is beneficial, to safeguard businesses from defaulting on payments and potentially ruining their businesses. 

VAT loans are thus a type of business funding used to pay VAT bills and reduce the impact of costly late payment fines. Using finance can spread the cost of a VAT bill and improve company cash flow, which in turn can allow for increased competitiveness, growth and expansion within a business. 

At JPM capital, we offer short-term business loans (secured or unsecured) which effectively turns a quarterly VAT payment in advance, into a monthly payment in arrears. This is a cash protection facility, which allows businesses to focus on building their business – without worrying every 3 months about how to manage the impending VAT payment. 


How do I apply for VAT funding

At JPM capital we understand that the fast-paced nature of the corporate world relies on a quick and convenient solution. This is why our process for receiving VAT funding is simple and easy to complete. We do not require a detailed business plan nor do you need to make a formal appointment to secure your business VAT funding. The process is quick and simple, summarised in 3 steps: 

Step 1: Apply for our VAT funding loans in minutes by filling out are online forms, available here (link). 

After receiving your online application, we will ask you to upload some documents that we will need to review. Once this has been completed, our team will call you to discuss the next stages of the funding process. 

Step 2: Our specialist VAT funding facility when they call you up to discuss your application 

Step 3: You will receive a decision within 24 hours once the documentation has been submitted.

For further insight into JPM Capitals VAT funding solutions, visit our VAT funding page or call our friendly team today!

5 Reasons to spread your VAT payment

July 29, 2020

Why spread your VAT payment?

More and more businesses have begun to realise the value of protecting cash-reserves and managing cash-flow in order to grow their business successfully. Recent world events have only highlighted this further. As incomes have been hit, we realise the value of holding cash in the business. One method of cash-protection to aid growth which is proven to support cash-flow is VAT funding. 

This facility allows businesses to turn a quarterly payment in advance, into a monthly payment in arrears. Here are 5 quick reasons why you should consider spreading your businesses forthcoming VAT payment:


Manage the peaks and troughs of cash-flow:-


Very few businesses invoice quarterly. Most income is derived monthly or by contract. A quarterly ‘chunk’ payment is contrary to how most businesses’ cash-flow operates. For instance, you will pay salaries each month, not each quarter! This is inconvenient and burdensome. VAT funding means the lender will pay the quarter’s payment on your behalf. The business makes 3 equal payments beginning the following month.


Cyclical Nature of VAT payments:


VAT is calculated based on historical trading performance. It is possible and even likely that bigger VAT payment would be generated at times when business cash-flow is lessened. For example a Pub/Hotel could have a busy Christmas period – this would trigger an abnormally large VAT bill around February – which would be the quietest time of the year. Taking a chunk out of cash-flow whilst income is at its lowest is bad cash-management. Keeping cash-flow management balanced throughout the peaks and troughs is imperative.


Allows you to focus on growing the business:


Large VAT payments out of cash-flow often mean sacrifice elsewhere. This might mean that you have to spend valuable time chasing debtors in order to raise cash. Or it might mean holding off on a potentially lucrative contract, or hiring that new member of staff that would help grow the business. Either way when you juggle cash to make VAT payments usually there is a sacrifice. This can easily be avoided by having a guaranteed funding option in place.


Rainy day fund:


Covid-19 has been a harsh lesson for many businesses. Sometimes things happen in business which are out-with our control. If we do not plan ahead sufficiently it can be damaging. It is important to protect cash-reserves during the good times to ensure you are best placed during the bad times.


Revolving Credit line:


When VAT funding is put in place, typically the facility is arranged on a ‘rolling’ basis. This means that you can plan ahead safely in the knowledge that each quarter’s payment is already covered, providing you have made all previous months’ payments on time.

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