Raising Additional Capital to Pay HMRC Tax

Usually raising additional capital to pay HMRC tax may be a simple task for a director to carry out. Options exist when fighting with business cash flow and raising capital to pay HMRC and avoid liquidation.

Invoice finance?

Two types of invoice finance options available:- 

Invoice Discounting. – Once goods are delivered and signed for, and the invoice issued. The lender will pay a proportion (variable) to your company when you, the supplier, receive payment from the supplier. Then you keep an agreed amount, and the balance is sent to the lender, including fees. The supplier retains control over the sales ledger and is responsible for collecting and receiving the debt.

You can then use this to repay your bank loan. Saving late payment fees, extra unplanned interest, and a fee for termination of the contract from the bank facility. Thus ensuring the business has fulfilled its payment duty to the bank. We deal with over 35 lenders, helping improve your business cash flow.

Invoice Factoring.– Once goods or services are delivered and the invoice is issued. The lender transfers most of the balance to your company. When the customer offers payment, they pay the lender directly. The lender transfers an amount previously contractually agreed to your bank, less any fees—the lender, in this case. Therefore, it retains the primary control over the collection of the debts from your customers, not you. You, in effect, assign your sales ledger to the lender as security.

Invoice finance speeds up cash flow dramatically when a service or goods are received. Once the Invoice is raised. The cash, as per the value of the outstanding invoice, is released by a lender (not 100%, though). Invoice finance assures quicker access to funds, but can be costly.  

When unable to pay the business bank loan?

Starting a new business venture remains difficult and requires planning. One main problem remains when financial liabilities eat into the business’s profit, affecting cash flow. Usually, pressure from the business bank does not help. They are concerned that you make repayments on a business bank loan on time. If pay dates are missed. The bank starts sending reminder letters and advises overdue interest. Increased repayments are then required each month, increasing further financial pressures. To deal with this, you may consider restructuring and take actions to raise additional finance. This may help rescue your business. Avoiding a build-up of debt and sinking into arrears with your bank. 

If you’re unable to pay your business bank loan? Then seeking advice from an independent Licensed Insolvency Practitioner, such as HBG Advisory, will help. Failing to pay your bank can affect other creditors.

Additionally, understand when you can’t pay back your bounce back loan.

Raising Capital to Pay HMRC Tax  – What happens when you default a business bank loan?

When you realise you are no longer able to pay the business bank loan. Then you should seek help from your bank (See links below). The bank will charge late payment fees. You will incur increased interest costs and administration costs for every payment missed. 

Depending on the bank or financial institution. Missed payments over a three or more month period remain recorded as a default on the business credit file.

A default recorded on the business credit record reflects poorly. Indeed, it highlights risk factors. A poor credit record may affect future eligibility for finance, so take care.

At this points book an essential directors liability review.

Raising Capital to Pay HMRC Tax  – Seizure of assets?

A secured business loan lent against a specified property or another tangible asset. Therefore, if you default on the payment, the outstanding amount may be recovered by taking possession of the assets. Commercial property, machinery, vehicles and equipment, though, remain then allowed to be repossessed. Only though if and when you fail to repay your business loan.

Often banks ask for personal guarantee agreements if a Director has no credit history. It means signing a personal guarantee makes the director liable for paying the loan back if the company fails. This agreement stays in place even after liquidation. 

Raising Capital to Pay HMRC Tax  – Looking at refinancing a business loan?

Refinancing your business bank loan may be a cost-efficient option to repay your commercial loan. If you source a better deal than your existing loan? Then this may help minimise current debt, with a cheaper debt deal.

Refinancing helps reduce interest rates and longer payment terms, reducing monthly outlay. When a cost-effective option is unavailable, and your ability to gain credit is therefore damaged? So, consider an insolvency process.

For further help on finance> please read, Available Loans for Businesses In The UK.

Once you realise your business heads towards insolvency, you may then wish to consider a Creditors voluntary arrangement (CVA)  A CVA will help keep the business afloat. A CVA allows your business to negotiate terms with the business creditors formally. Based on this belief, the company can return to profitability again. A CVA protects the business against legal action by creditors.

For further reading, please view: ‘Options paying PAYE arrears.’

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