The old joke about “death and taxes” will have particular resonance for owners of businesses which are large enough to be liable for taxes but too small to negotiate “sweetheart deals” with the Inland Revenue. The fact of the matter is that while even the most intransigent high-street lender may be open to some level of negotiation on payments (albeit probably at a cost), HMRC is different. In fact, even if a small company finds itself landed with an unexpected tax bill due to HMRC’s error, they still have to deal with it within the designated time frame. In other words, in spite of what the adverts say, tax can indeed be taxing. Fortunately, there are ways to make it more manageable – and they start with a helpful lender.
The good news about corporation tax is that the current government has just cut it and has pledged to cut it further by 2020. The bad news is that it still has the power to land small companies with a hefty bill, which must be paid in its entirety by the given deadline. For many companies, getting finance to spread this cost over a number of monthly payments is the only feasible way to manage the payment and maintain reasonable cash flow. This can, however, be challenging, particularly for companies which have little in the way of assets to offer as security, as is often the case with modern companies, especially younger companies, which increasingly look to manage their cash flow by renting/hiring/leasing equipment and tools as they need them rather than buying them outright. Data-driven high-street lenders are likely to be very wary about touching companies in this situation. Boutique lenders, however, still have the “old school” people skills to assess the human aspect of the business as well as looking at the numbers.
VAT is one tax which recently became a whole lot more taxing for some companies. As of January 2015, the VAT MOSS initiative has meant that businesses which supply digital products to consumers in the EU need to charge VAT at the rate in force in the customer’s country of residence rather than the UK rate. This is on top of the longstanding challenges involved in managing VAT and its associated bills. As with corporation tax, HMRC demands payment in full by the given deadline, even though this can have a horrendous impact on a company’s cash flow. Again, in many cases, the best solution is to get a tax loan to spread the payments across a longer period and essentially keep the business wheels turning. For the reasons already mentioned, however, it can be challenging to get these sorts of loans from high-street lenders, which is why boutique lenders can be so very helpful.
Tips for finding a lender
Type “tax loan” into Google and you’ll probably be deluged in results. The problem is that Google can only rank sites based on relevance to your query rather than appropriateness to your need. In other words, getting to the top of Google rankings is a test of your ability either to pay for advertising space or to optimize your site for Google, rather than a reflection of your ability to deliver a fine service to your customers. Of course, it’s always possible that good companies do get to the top rankings, it’s just far from a given. With that in mind, when dealing with an important matter, such as getting the right tax loan, it is crucial to take the time to look at both what each lender can do and how they do it. In particular, you’re looking for lenders who run their own book, rather than acting through intermediaries, as this gives them maximum freedom in their decision making and maximum flexibility in what they can offer.