# Bridging a VAT bill — what business owners need to know

*Source: https://credicorp.co.uk/bridging-a-vat-bill/*

If you run a VAT-registered limited company in the UK, you will know the rhythm: you collect VAT on every sale, you reclaim VAT on every purchase, and every quarter (or month) you pay HMRC the difference. The arithmetic is straightforward; the cashflow is not. A VAT bill that lands the same week as payroll, supplier deposits and a slow-paying customer is a genuine problem. This article is the practical guide.

## First — what HMRC will do

HMRC’s “Time to Pay” arrangement is a real, formal option for businesses that can demonstrate genuine short-term cashflow difficulty. You phone the Business Payment Support Service (0300 200 3835) BEFORE the payment deadline, explain the position, and agree a phased repayment plan — typically over 3-12 months. The arrangement carries interest at HMRC’s published rate (currently around 7.75%, recalculated periodically) and a 5% surcharge if the original payment was missed first.

This is the cheapest option in almost every case. Ring HMRC before you ring anyone else.

## Where HMRC won’t help

HMRC won’t engage on Time to Pay if:

- You’ve already had a Time to Pay arrangement in the recent past for the same kind of bill.

- The position isn’t a genuine short-term cashflow squeeze (i.e. the business isn’t actually generating the cashflow it’ll need to repay).

- You missed the deadline already and didn’t make contact — in that case you’re into surcharges and a hardened position.

If HMRC won’t engage, short-term finance is the next real option.

## Where short-term finance fits

A short-term business loan from a fintech lender can bridge a single VAT bill. The mechanics: take the loan to cover the bill, pay HMRC on time, then repay the loan from the next 4-12 weeks of trading. You avoid HMRC surcharges, you keep your filing record clean (important for future Time to Pay if you ever need it), and you have a defined repayment schedule.

The cost comparison is roughly: HMRC Time to Pay at 7.75% APR vs a fintech short-term loan at much higher headline APR but spread over 30-90 days. On a £3,000 VAT bill, the £ cost is usually in the £100-£250 range either way — close enough that the deciding factor is often “can I get HMRC to engage”.

## What we’d argue against

Two things we wouldn’t recommend: paying a VAT bill on a personal credit card (you almost always lose protections and the % rate is high), and ignoring the bill in the hope that the next month’s trading covers it (HMRC surcharges escalate, your bank rating deteriorates, and the conversation gets harder).

## How to make the call

- Calculate the £ bill, the date it’s due, the days between now and then.

- Phone HMRC’s Business Payment Support Service. Ask about Time to Pay. Note their answer.

- If they decline, get a short-term-loan quote that matches the cashflow shape (the [Credicorp business loans calculator](/business-loans/) will quote against a 30/60/90-day term).

- Compare the £ totals and the repayment shapes. Pick whichever costs less AND fits the next 90 days of cashflow.

If you’re considering short-term finance specifically for a VAT bill and want to talk it through, the team is on [/contact-us/](/contact-us/).

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Credicorp Limited — UK lender to limited companies (Company No. 16093826). credicorp.co.uk