April is here and with it comes the introduction of the new Flat Rate VAT Scheme introduced by HMRC to help simplify how small businesses calculate their VAT. The scheme is meant to be easier as it applies a fixed rate of VAT depending on the trade or profession of the company required to pay.

The new scheme does however come with restrictions on what can be reclaimed but aims to simplify the process, particularly for small businesses and those that typically have lower levels of capital expenditure.

Normally a business deducts the VAT on what it buys from the VAT charged on what they sell.  Under the Flat Rate Scheme, that two stage process is simplified to one step.  For example, the flat rate percentage for a clothes shop is 7.5% – so if the owner of that shop sells a dress for £120 including VAT of £20 he will pay a flat rate of £9 (£120 x 7.5%) to HMRC.

The confusion kicks in when it comes to which sales can be included when reclaiming VAT and what percentage rate is charged for each business type. The answers to both questions can be found on the HM Revenue and Customs (HMRC) website.

What’s not changed however is the pressure businesses, large and small, are under when trying to find the capital to pay the required levels of VAT.  The new scheme will still mean registered companies must complete VAT returns with the frequency dependent on their accounting methods and the notifications sent to them by the HMRC.

If you are struggling to pay your VAT bill whether you are using the traditional system or the new Flat Rate VAT scheme, that’s where PFC may be able to lend a helping hand. Since 2015, short term VAT funding for SMEs has been growing steadily, and this year is responsible for nearly 40% of our volume of arranged business.

New and existing SME clients have started to benefit from being able to spread their VAT bills over 3 months; they no longer need to ring-fence essential capital in the business to make the payment. Our lending panel can arrange for the VAT payment to be made direct to the HMRC, or simply refunded into the clients’ bank account if they have already paid it.

With a panel of more than 45 regulated lenders PFC are able to provide businesses with a quick and effective route to finance where others may fail.  Whether needing to pay staff on time or having the required cash flow for paying a VAT bill, let us help you get ahead and avoid paying any late penalties.

Contact a member of our team directly on: 01829 738 799.

Simple steps on how to file a HMRC tax return

We are fast approaching the deadline for online tax returns (31st of January) and many of us are getting that tax return dread.  If this is your first year, you’ll need to make sure you’re registered and you may need to allow an additional 20 days.  The paper method allows more time with a deadline of October.

To ease the dread of the tax return deadline, we have broken the return process into simple steps;

  1. Get Prepared

Before you start your tax return make sure you have all of the necessary information to hand and allow yourself enough time.  You’ll need…

  • Details of your income – which might include finding your P60 (if you earned more than £8,500), your P11D (which outlines details of expenses and benefits), and payslips. You’ll need a P45 if you’ve changed jobs within the year.
  • You will also need interest statements from banks and building societies, and details of pension contributions made – plus information about any Gift Aid donations.
  1. Filling in the return

Always check your personal details first, this can prevent costly mistakes.  Fill in all sections that apply to your circumstance.  The system will react to the information you put into it and will prompt you as to where to find the information it is requesting.

Take your time.  The HMRC’s system will highlight when it thinks you’ve made an error.  You can always save and return to at a later date.

  1. Pressing Send

Always make sure you have read everything through and haven’t left any gaps within the form.  When you are sure you have fully completed the form, press send and wait for the confirmation message on your screen and make a note of your confirmation reference.

  1. Help!

If you need help with your return, visit or call the helpline on (0300) 200 3310.

If you’re worried you can’t afford your tax bill you should always still file your return.  The fines for late payment are a lot lower than the fines for late filing.

 If you need help paying your tax bill, PFC may be able to help.  Contact us on: 01829 738 799.

Remember; there are plenty of people out there on hand to help with filing your tax return, just make sure you don’t leave it too late!

The Unavoidable Truth

They say that there are only two things you can be sure of in life and they are death and taxes. The good news however is that there are measures that you can do in both cases that prolong life or reduce the impact of taxes on your business or personal cash flow.

Many will have the first in hand with ‘Dry January’ or various New Year resolutions to get fit, eat more healthily or give up smoking in an effort to live a healthier and hopefully longer life. When it comes to managing taxes, unfortunately you can’t put off the inevitable deadline of 31st January for self assessment tax returns, however there are plenty of options to consider if looking to secure funding and help manage the tax bill payment.

With a range of lenders making up PFC’s funding panel, no tax bill is too great or too small. In addition, there is a specialist team on hand to provide a quick decision making process and advise on the required levels of funding, your preferred terms and how repayments can be structured to allow you to budget for manageable repayments.

Arrangements can be made for payment to be made directly to HMRC or into an office account, typically within a week of the application. The repayments are in turn arranged in line with the liability so typically between 6 and 12 month terms for self-assessment tax funding.

Having the flexibility of a short term loan for tax liabilities allows you to spread the cost of the liability into manageable monthly payments to assist with the budgeting in the company, help ease cash flow and relieve the pressure of having to find a lump sum payment.

The short term, unsecured fixed rate loan facilities offered by PFC cover all types of tax funding including; Schedule D tax, corporation tax or capital gains tax to name a few. With the right tax funding support in place it can give individuals and businesses a new lease of life by removing the worry and freeing cash for other business priorities.

It’s also good to know that with your tax taken care of there’s a weight off your shoulders and a great stress relief. Maybe with this support you can take care of two of life’s certainties by better managing your tax and in turn potentially living a longer stress free life.