In professional practices, the date for your final settlement of a tax demand won’t always be convenient.For whatever reason, including things such as a large capital purchase or a delay in receiving a payment, you may find yourself in the worrying position of facing a cash-flow challenge.

If this is your current business finance position, the first thing you need to do is to not panic. Even the best run businesses may face an unavoidable cash-flow challenge now and again.

The second thing you need to do it consider your options …

Do nothing

Waiting until such time as you have sufficient capital to settle your tax bill may be, at face value, a tempting proposition. All of us are vulnerable at times to hoping that something won’t be noticed.

However, whatever might have been the case in the past, the modern HMRC recovery procedures are highly efficient. Late payments will be noticed and late payment charges may be levied. In some cases, fines and recovery proceedings may be initiated.

Apart from anything else, there is the possibility of reputational damage – not something that most professional practices wish to contemplate.

Liquidate assets

Perhaps you’re fortunate enough to have assets that can be rapidly and cost-effectively disposed of in order to raise capital.  Yet it’s important also that such assets are capable of being disposed of in a ‘zero business impact’ fashion otherwise when doing so, you’ll be damaging your professional activities.

It’s worth keeping in mind too that you may need to replace those assets in due course and that involves asset finance. There’s also a high probability that there will be a difference between your disposal and re-acquisition figures – and it’s not likely to be in your favour.

Use your precious capital reserves

Depending upon your actual cash in the bank position, you may have just about sufficient resources to pay the bill immediately.

That might be fine but not if it leaves you with so little deployable capital that you’re unable to fund other immediate business activities.  This is referred to as the ‘lost opportunity cost’ of using your capital in situations where your overall reserves are stretched.

Use acquired funding

It’s perfectly possible to use loans to settle tax debt. The question is – where to acquire such funding?

Unfortunately, some conventional lenders may be unable to assist with this type of loan. That’s because typically such loans are:

  • for settling a debt;
  • of short or medium duration;
  • not linked to asset acquisition;
  • difficult to securitise – i.e. they don’t typically conform to the characteristics for a secured business loan and some lenders may be uncomfortable with unsecured lending.

For all these reasons, you may benefit from specialist services providing tax funding options.

What you can do

Specialist providers such as ourselves at may be able to offer typically cost-effective solutions to this dilemma. They have defined a range of products specifically designed to assist professional clients who have encountered a short-term funding challenge at the worst possible time in terms of settling tax debts.

Loans may be available for settling the immediate demands arising from things such as corporation tax, self-assessment and VAT demands.

Things to consider

Just like any form of business finance assistance, it’s advisable to ask certain questions of your source of business loans. They might typically include basics such as:

  • what durations of loan are available? A lot will depend upon your individual circumstances but borrowing, all other things being equal, will typically cost more in overall terms the longer you take to repay it;
  • is the potential provider an expert in areas such as VAT funding, business loans and general tax funding? It might be possible to waste a lot of time talking to and making applications with, companies who might be unlikely to offer assistance;
  • consider the provider’s potential for a fast response. Some may be very process and procedure-bound and that might involve you in frustrating delays waiting for reviews and signoffs. By contrast, some lenders may be able to respond quickly – perhaps within as little as 48 hours;
  • check for fees and charges. There is nothing necessarily wrong with lenders charging fees but make sure though that you understand all such costs and your obligations relating to borrowing and repayment;
  • be aware that some loans may require security. This typically means that you will need to legally commit yourself to offering up an asset to guarantee your borrowing. That asset would be seized for sale in the event you are unable to meet your loan repayment commitments – this is called secured lending. By contrast, some funding providers may offer unsecured lending.


There is no need for a professional practice to risk HMRC penalties or the stress of being unable to meet a tax demand. Cost effective business funding may typically be  available to help!

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Professions Loans Limited, Wilson House, 2 Lorne Park Road, Bournemouth, BH1 1JN Call 01244 470 807

Authorised and regulated by the Financial Conduct Authority No. 654314 - Professions Loans Limited is a credit broker and not a lender.