If your VAT is a headache it’s now set to get worse.
British firms owe close to £2.59 billion in unpaid VAT. What can you do if you are found to be owing?
Unpaid VAT is Rising
The recent figures show that the amount of VAT which British business owes had gone from £ 2.55 billion to £2.59 billion in just one year ( 2014-15 to 2015-16).
As a small business your cash-flow can be severely upset by late payments which leave short of the cash to pay your dues on time.
You are not alone. It is estimated that almost three-quarters of businesses need to be paid on time to avoid a big hole in the bank balance.
Late Payments are Partly to Blame
Figures produced by BACS Payment Schemes show that small and medium sized businesses in the UK are currently owed £ 26.3 billion. That’s a lot of debt.
In fact the average overdue payments are causing an average debt of £ 32,185.
If you are found to be owing, then , you can expect no mercy.
The VAT man can seize a companies assets to recover the debt and the amount can end up being a lot higher than the original VAT bill. In the absence of enough saleable assets they will simply shut your business down until payment is made.
What can you do?
For a start if you have sufficient funds in overdue invoices you could consider going down the Invoice Factoring route.
Using this you can get your overdue invoices paid virtually immediately although you will be charged a percentage of the invoice amount.
That doesn’t sound too bad until you realise that it is a percentage of all your invoices whether they are subject to late payment or not.
In some cases this is only a temporary solution.
An Alternative Solution
If paying a portion of each and every invoice doesn’t float your boat then you could try one of the specialist lenders who have developed schemes to help small businesses with this problem.
I have added links to three suppliers, of this type of funding, that I know of but I’m sure you can find more by simply googling “VAT funding for SME’s”
By the way I have no links to any of these nor do I receive commission payments.
I am strictly impartial.
I hope that this information is helpful.
One thing that I can tell you is that sorting out this type of problem early on can save you money.
It can also help you sleep better.
So on that note, goodbye for now.