APN’s (accelerated payment notices)

APN’s  (accelerated payment notices)  were introduced in 2014, but are now starting to bite on UK businesses.

Basically, any business utilising a tax avoidance scheme, will now need to pay up first and dispute later.  This has far reaching consequences on UK businesses, especially on Cash Flow.

Since the new rules were introduced in 2014, over 60,000 APN’s have been issued , this has forced tax avoidance scheme users to pay up £3bn of disputed tax upfront while their tax affairs are investigated by HMRC.

Under the scheme, which removes the economic advantage of taking part in tax avoidance by forcing them to pay up first and dispute later, a taxpayer with an outstanding tax bill has 90 days once an APN is received to pay up or make representation to HMRC if they consider the notice incorrect.

HMRC comment: “The vast majority of avoidance schemes just don’t work. We’re determined to change the economics of tax avoidance by making it harder for the dishonest minority to cheat the system – collecting disputed tax upfront and tough new sanctions for enablers of tax avoidance will mean people will think twice.”

We have recently seen many businesses approach us for finance that are  “trapped” in this situation.  Typically, they have taken out a tax scheme, and enjoyed the extraction of cash blissfully thinking that the issue will “go away”.

Now HMRC come along and demand a “deposit” of the amount of tax potentially avoided, if you want to contest the case, obviously all businesses do…..  HMRC’s attitude is – If “we win” we keep it, “if you win, you can have it back”.

This has a potentially massive impact on cash flow, especially as HMRC are reluctant to enter into any Time to Pay agreements beyond 12m (if you are lucky).

As a bCommercial Finance Brokerage, we have access to funders more than happy to provide funding against these sort of scenarios.   
We have arranged 3 similar refinances this week alone.

Looking for No 4 …………..Contact us

MBI Funding

Sterling Capital Reserve have vast experience in advising management teams on debt funded management buy-in (MBI) procedures where a new merger team take ownership of the business.

Obtaining finance for a management buy in is traditionally a difficult process, particularly when compared to a management buyout. From a lender’s perspective, a key consideration for MBIs will be the high inherent risk attached to an incoming management that will not be as familiar with the business as the incumbent management team. It is because of this risk that funding can prove trickier to secure. Banks can often be hesitant to lend for this reason but thankfully, through our key relationships with a variety of niche lenders and private lending consortiums, we have access to a wide range of funding options that can make the difference.

We are recognised as a leading adviser on MBIs with the experience, commitment and relationships to manage the often complex and time consuming process on behalf of management Buy-in teams.

 

We are regularly called in to assist Accountants and Corporate advisers source funding for MBI’s for their clients.  We are also referred to many proposed transactions by banks who can’t provide MBI finance.  We help fund the deal, then the bank takes the client back (at a cheaper rate) in 12 months time as a refinance.

Revolving Credit Facilities

We are seeing an increasing use of revolving unsecured credit facilities that are now provided by niche lenders. These facilities are totally unsecured, but utilise credit insurance on the borrower.  So if the borrower is profitable, has net assets in excess of £250k and established more than 2 years, an insurable limit can usually be obtained.

Funding up to £1million, can be used, repaid and reused as often as cash flow cycle requires. The lender simply pays the supplier direct, no lien is taken over any purchases and the “credit line” can be utilised for up to 120 days.

There are no set-up fees and no minimum transaction volumes. As charges are only made when the facility is used, it offers an excellent back up finance facility without charges on the company or personal guarantees. Also because this facility does not compromise the security arrangements with other business funders, this unsecured credit facility can work alongside existing business bank finance.


Advantages of a revolving credit facility:

Additional Funding over and above existing lines
Pay as you use arrangement
No security required
No personal guarantees required
Take advantage of opportunistic purchases
Negotiate supplier discounts for early repayment


We have utilised this facility for a number of our clients, for a variety of purchases from steel, raw materials, food through to caravans and motor vehicles.

It works and clients like the flexibility.  It’s good to see Alternative Lenders coming up with innovative and appropriate financial products to compliment bank lending.

 

Concentrated contractual debtors, can be tough to fund through Invoice Finance but…

Concentrated contractual debtors, in this case construction, can be tough to fund through Invoice Finance but…

We recently took a call from one of our Invoice Finance contacts, they were unable to help a prospect which had secured  significant work with a PLC main contractor.

In the evolving Alternative Finance sector there are now a number of lenders/platforms who will consider lending in circumstances like this and some will even led against applications rather than waiting for the invoice to be raised.

In this instance we were able to arrange a 75% prepayment against the invoice with the Lender content to continue to support the business through the term of the contract.

Happy client, and the introducer has indirectly supported the prospect, added value and strengthened its relationship with the prospect which may well lead to future business.

The Commercial Finance / Alternative Finance Market is constantly changing not every situation is fundable but It’s always worth giving us a call.

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Community Interest Companies

We have access to a specialist syndicate actively looking to provide finance to CIC’s. This enables viable commercial businesses with charitable or community objectives to borrow directly from a like minded syndicate where historically banks have been reluctant to lend. This is conditional upon the business qualifying for, and the lenders receiving SITR (Social Investment Tax Relief) at 30%.

This opens up additional funding lines for over 10,000 UK registered CIC’s. We are looking at a number of projects at the moment including funding artificial pitches for community football clubs, refurbishment of a community theatre, providing loan funding to CDFI’s, finance for a medical charity and even the purchase of a steam train.

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