As the UK faces a recession, many businesses are experiencing – or will be experiencing – cash flow issues.
Law firms are required by law to pay their tax bill every quarter, so financial pressure to pay can particularly affect SMEs if they experience a short-term dip in working capital. This is where flexible funding solutions for the legal sector can help.
Read our five benefits of law firm funding to help you pay your VAT funding and avoid HMRC penalties.
1) Spreading out VAT payments
Instead of paying a large VAT liability every quarter, one funding option available to law firms is an unsecured VAT loan that allows the liability to be spread over 3 monthly payments. This gives an instant 30 day cash flow boost and more manageable repayments over the next 3 months.
With Acorn, firms have the option to revolve the facility as many times as you wish. This means that the quarterly liability will turn into a smaller, monthly liability. Different firms will use this facility in different ways. We find some will use this as an ongoing cash flow tool, whilst others use it on an ad hoc basis during quieter quarters.
2) Payment can be made straight to HMRC or can go directly to the Customer
At Acorn, clients have the option to have the loan paid straight to HMRC as part of our law firm funding solution. This takes out the intensive administrative work on your part, which in itself can be hugely time intensive. However, some firms require the funds to be paid directly to them and we have the flexibility to provide both options.
With a revolving facility, the VAT loan can be paid directly to HMRC every month, saving you a considerable amount of time and effort.
3) Avoid late payment penalties
Businesses failing to submit or pay a VAT return may face a fixed surcharge of up to 15%. This is based upon how many times they have defaulted in a 12-month period.
Other VAT penalty amounts depend on the reasons for a businesses error and how much tax has been underpaid.
However, by working with a broker for your VAT funding solutions, administrative errors will be minimised. At Acorn we take great pride in always ensuring funds are either with you or HMRC before the 7th of the month.
As well as the financial burden of these penalties, it goes without saying that the additional time to go through errors or defaulted payments can be incredibly stressful for everyone involved in financing a law firm.
4) Finance other business investments
By freeing up cash flow, a VAT loan allows you to invest back into your business.
Alternatively, a loan can help ease pressure on other necessary expenditures that you have to pay as part of your business outgoings.
5) Short-term VAT loans are unsecured
With our VAT funding solutions, short-term VAT loans (spread over three months) are unsecured. As our lenders don’t require collateral to free up your funding, you can have confidence in taking out funding to free up your cash flow for your firm.
A loan to help fund other HMRC taxes can also be taken out, such as:
- Income tax
- Corporation tax
- Capital Gains tax
- PAYE and NI for employees
Easy law firm funding with our Secure Customer Portal
With our Secure Customer Portal, our customers can get their funding approved as quickly as possible with our lenders.
The portal allows you to check that your information is correct, and upload your business documents easily and securely.
High street banks are unable to fund VAT loans, however at Acorn we have three tiers of lenders providing VAT funding for a range of sized firms.
Contact us
For more information about our VAT funding for solicitors or to have an initial chat with one of our brokers, please don’t hesitate to contact us.
- Call us on 01242 395507
- Fill in our contact form
- Book a call back at your convenience
Or read more about the other business loans we offer
