Understand VAT bridging – the FAQs
By Vincent Bull, managing director, VATBRIDGE
- So, why would anyone bridge VAT?
Speed is the primary driver we have found. Finding out a transaction has altered slightly at the last minute and is VAT qualifying can cause panic. It happens. It is not unknown for us to receive a frantic call telling us contracts have been exchanged and we have seven days to put a facility in place. We add huge value here; having completed transactions in five working days. That said, it is nice if we can have a little more notice.
- This is a relatively new concept. Just how does it work, in layman’s terms?
It’s new, but actually very simple. Once we receive an enquiry, we produce a quotation which normally leads to a formal offer being made. Where time is short, we can assess the transaction and make an offer on the same day. The client then confirms that the offer has been accepted and we engage our solicitors. They liaise with the relevant third parties, pulling together the legal documentation which is forwarded for signature.
While all this is happening, we become the appointed VAT agent and handle the whole reclaim process. When funds are advanced, the VAT return is made. Once HMRC has paid the reclaim, we relinquish the agency and the file is closed. Done. Obviously, there is a lot of work behind the scenes to make all this happen, but we aim to minimise the work for the client and to deliver the required funding on time.
- What are the risks?
When dealing with the tax man, you want someone you can trust and who delivers. It’s an absolute must to deal with someone who has a good reputation in the marketplace. HMRC is stretched and communication is a challenge at times. Dealing with them on a daily basis provides us with a unique insight into the issues that will negatively impact upon a successful, prompt reclaim. Using this knowledge, we are able to avoid potential problems and speed the reclaim process up.
- Are you as much fun as the VAT man to deal with?
To be fair, HMRC is under a lot of pressure. We will provide them with all the comprehensive documentation, ensuring that when the VAT man visits, it goes as smooth as can be.
VAT lending should always be a simple process. A VAT bridging loan simply means most of the paperwork processing is taken away from you. It is very much an ‘enabler’.
- How do you navigate the reclaim process?
The reclaim process looks simple on the face of it but, in reality, one mistake can cause major headaches and lead to expensive delays. We work with HMRC every day, have a thorough knowledge of their systems and the issues that cause delays. So, as well as quickly providing the VAT funding, the administration relating to the reclaim is dealt with too – saving both time and money. You could say we have to be The Flash to their VATman. After all, a client should concentrate on running his business and not dealing with HMRC.