30 per cent hike in companies using short term finance

COMPANIES are turning to short term finance to pay off tax demands by HMRC, according to lenders.

Income tax receipts hit an all-time high of more than £153bn in the last tax year.

HMRC issued more than six million letters warning people that they face a tougher penalty regime. Fines of up to £1,600, automatic penalties of £100 and new £10 per day fines helped increase the Treasury coffers.

An extra ‘late payment’ fine is due on August 1st 2012 – or a penalty equal to 5 per cent of the tax due. This could be a significant amount if the individual is a higher rate taxpayer.

Chris Baguley, managing director of Bridging Finance Limited, said: “The mix of personal tax, corporation tax and VAT pressures are leading to a surge in demand for short-term finance from businesses that need rapid access to funding.

“When a tax demand is made it is often for an amount that companies can’t access immediately or within the required time period. This is a perfect opportunity for a bridging loan which can be secured on a property and funds available within 48 hours. We’ve seen a 30 per cent increase in the number of businesses requiring bridging loans to pay off corporate tax demands.”