A quarterly VAT liability is the most predictable cash event in a business, and it still catches out firms whose money is tied up in machinery.
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Yes, a business can refinance equipment it owns outright to meet a VAT liability. The funder buys the assets at trade value, hires them back and releases the cash, which is then applied to the bill. Whether this is fundable depends entirely on why the money is not there. A timing mismatch, where a large customer pays late or a big purchase fell in the wrong quarter, is a fundable story. A recurring inability to set VAT aside is a structural problem, and funders will decline rather than lend into it.
Used kit: Yes — the assets can be well used, but the quality of the explanation matters more here than the quality of the equipment.
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Business asset finance is quoted on a flat rate, so that is what this shows — with the equivalent APR underneath, because the two are not the same number. A quick guide only; your actual rate depends on the asset, term, deposit and lender.
Representative example: on Hire Purchase, borrowing £25,000 over 48 months at a 6.0% flat rate (equivalent to 11.5% APR representative), you would repay around £646 a month; total amount repayable approximately £31,000, of which £6,000 is the cost of finance. This calculator is for illustration only — it is not a quote or an offer of finance, and the rate and repayments you are offered will depend on the asset, term, deposit and your circumstances. CW Asset Finance is a credit broker, not a lender, and may receive a commission from the lender that funds your agreement. All finance is subject to status, affordability and lender approval. CW Asset Finance is an Appointed Representative of Rural Finance Limited, which is authorised and regulated by the Financial Conduct Authority (FRN 630701).
Of all the uses of funds, tax liabilities attract the most scrutiny, and honesty about the position is essential. A funder will want to know whether this is the first time, whether there is already a time to pay arrangement in place, and whether any other liabilities are outstanding. A single quarter caused by an identifiable timing event, backed by an aged debtor listing showing the money is coming, can be funded. A pattern of arrears, prior arrangements and accumulating liabilities tells the underwriter the business is losing money, and refinancing an asset does not fix that — it removes the last unencumbered value from the business. Title on the assets must still be proven with invoices and serial numbers, and inspection is normal. Because the equipment is being sold, ask your accountant about the consequences before proceeding.
Examples of the machines we are asked to fund. This is not an exhaustive list — if what you are buying is not here, it does not mean we cannot fund it. Your supplier quote is what the agreement is written against.
| Machine | What it is |
|---|---|
| Hitachi ZX135US excavator | Owned excavator in the fleet |
| JCB 3CX Sitemaster | Owned backhoe loader |
| CAT 320 GC excavator | Owned tracked excavator |
| Ford Transit 350 panel van fleet | Owned commercial vehicles |
| Isuzu Grafter 3.5t tipper | Owned light tipper truck |
| Amada HFE press brake | Owned fabrication equipment |
| ESAB welding plant and positioners | Owned workshop plant |
| Toyota Tonero forklift fleet | Owned forklift trucks |
| John Deere 6155R tractor | Owned agricultural machinery |
| Bomag BW120 AD-5 roller | Owned compaction plant |
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Commonly a growing contractor or supplier whose sales have jumped, so the VAT due has jumped with them, while customer payments lag by sixty days or more. The equipment is owned, the order book is healthy, and the gap is genuinely about when money arrives rather than whether it arrives.
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Bought on hire purchase, business plant and machinery normally qualifies for capital allowances on the full cost even though you pay for it monthly, which is a large part of why hire purchase is the common structure. On a finance lease you generally set the rentals against profit instead. The rules change between budgets and your position depends on how you trade, so treat this as the direction of travel and get your accountant to confirm the detail before you commit.
Not automatically, but it raises the bar. The underwriter is trying to work out whether this is a cash timing issue or an earnings issue. Evidence of a specific cause and a debtor book that supports recovery is what separates the two.
Disclose it immediately. Hiding it wastes everyone’s time because it will surface in the credit search or the accounts. Some funders will still proceed where the arrangement is being met and the underlying trade is sound; others will not, which is why placement matters.
Sometimes it is not. Where the shortfall is caused by slow customer payment, invoice finance may address the cause rather than the symptom. A broker worth using will say so rather than arranging a refinance that leaves the same problem next quarter.
It depends on how readily title can be proven and whether an inspection is needed. Vehicles move faster than fixed machinery. If a deadline is close, gather invoices and serial numbers before you make the first enquiry rather than afterwards.
It uses value you cannot use again, so yes, it reduces future flexibility. That is worth weighing against the cost of the alternative. The important thing is to fix whatever caused the gap, because the assets can only be refinanced once.
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See everything we fund in asset refinance and sale and leaseback →
Not an offer of finance. All finance is subject to status, affordability and lender approval.
Tell us what you’re looking to fund and Conor will come back to you personally — usually the same day.
Prefer to talk? Call 07581 364281 · serving Leeds, York, Harrogate, Wakefield, Selby, Tadcaster & across North & West Yorkshire.