Small businesses across the UK are struggling to find the cash for overdue VAT bills facing serious business critical financial consequences.
The total amount that is owed to the HMRC is said to be around the £2.6 billion mark up from 2014 and 2015’s £2.55 billion and £2.59 billion in 2015, 2016.
The HMRC can send in debt collection agencies and remove assets. They can issue immediate fines and other late penalty notices which can put huge financial pressure on a business. This is both unhealthy for the business but can be very stressful for those involved.
Some businesses fall foul to cashflow issues especially around VAT and other TAX affairs. If a business raises a large invoice to a customer and the customer is late on payment the company still has to pay the VAT to the HMRC regardless.
This is not a sign that the business is performing poorly – it’s is merely a cashflow issue and something that can be helped with invoice finance.
This can really harm SME’s who generally are not as robust as larger corporate firms when it comes to cashflow. Accepting large orders with large invoice amounts inevitably leaves the company with a large VAT bill.
And, when there is a problem around the payment of that invoice it is a significant issue when the HMRC require the payment regardless of the company’s cash flow problems.
By using a facility of invoice finance or invoice factoring an SME or small business can reduce the risk of cashflow problems affecting VAT and HMRC late tax implications.
With Brexit still lingering on especially after the news of the parliamentary vote slowing the process down it could be another real issue for those businesses who export their products outside of the UK.