The New Year is a time for celebration, reflection on last year and new resolutions and new opportunities for the year ahead. But for many business owners, a VAT bill due for payment in January or February can be an unwelcome way to bring in the new year.
Many businesses are able to plan carefully for big bills like the quarterly VAT demand. But for others it can be a big problem that comes round every three months. Even for businesses that can afford to put money aside in advance, unforeseen bills and cash flow hiccups can cause havoc. This is especially true at this time of year as January and February are traditionally quiet times in many business sectors.
Planning ahead is key
Business owners who have their VAT quarter ending in November and December know that there will be a bill to pay in January or February and, in an ideal world, the cash will be waiting in a tax saving account ready to send off to HMRC.
Many companies have a Christmas shut down and face a big bill for holiday pay in December, even though the business is closed. In addition, many of their customers will take Christmas as their own opportunity to pay late for goods and services. Add these factors together and it is easy to see that January and February can be an unhappy start to the year.
An unaffordable VAT bill can be the ‘straw that breaks the camel’s back’ for some companies. If a business is already struggling with poor cash flow and are juggling a number of unpaid bills, a demand from HMRC may be the final straw.
Help is at hand
The good news is that there are a range of options that can be used to deal with situations where there isn’t enough money to pay everyone. These options can range from agreeing a repayment plan with creditors, through to placing a company into administration or, in some cases, liquidation if there is no way of rescuing the business.
For expert advice on the options that are available for your business, call us today. We can help.