Using a Bridging Loan to Pay an Outstanding HMRC Tax Bill
If you are a property developer or business owner who is finding it difficult to raise the required funds to pay off an urgent HMRC tax demand then a bridging loan can be a highly practical and uniquely serviceable lifeline. Although there are various sets of circumstances where HM Revenue and Customs (HMRC) may choose to grant you a payment extension – these are not always available and failure to pay your tax bill on time can result in very serious consequences.
There are two situations where HMRC will expect and demand an immediate payment from you and these occur if:
1) HMRC think you can pay now.
2) HMRC are not convinced you can get your tax payments up to date.
Either way, if you are running your own business, struggling to keep up with your finances owing to unpaid invoices and other cash flow problems, and suddenly faced with an immediate HMRC demand that could destroy everything you have worked so hard to achieve, then there could be an easy way out. A bridging loan secured against your property assets could be the perfect tool that will give you the time you need to get back on your feet and back in the red.
By choosing to take out a short-term borrowing product in the form of a bridging loan, you can pay off your tax bill now and then pay off the bridging loan when you are in better financial shape further down the road.
It is, however, important to remember that bridging loans are only intended as short-term products – so you will need to think about how you will pay the money back when the loan term is about to expire.
In some cases, a bridging loan can be used as a speedily arranged, temporary fix until a more permanent funding solution is in place – such as a commercial remortgaging product or a second charge loan. Bridge financing is particularly useful in these situations as most remortgaging and second charge products take several weeks or months to arrange, which will not give you enough time to avoid enforcement action.
If you are a property developer faced with an urgent HMRC tax demand then it could be that you simply need a few more months to get your project finished before reaping the dividends. Again, a bridging loan arrangement can be put into place quickly, giving you access to much needed funds in the meantime so that you can pay off the tax bill quickly and get the work completed.
With low borrowing rates, the option to leave the interest rolled up until the end of the loan term and the ability to secure finance against the equity tied in with multiple properties you already own, a bridging loan is a fast and convenient, flexible and affordable solution that could solve all your HMRC tax problems quickly and effortlessly.