VAT Loans for Professional Services Firms
By Joshua Giles, Founder and Director · Reviewed by the CoreFi credit team
Last updated 20 July 2026
CoreFi is a broker, not a lender. We do not set rates and lenders make all credit decisions.
In short: £5k - £300k over 3 - 9 months. The VAT problem for professional services firms is structural, not incidental.
The VAT problem for professional services firms is structural, not incidental. Your main cost is people. Salaries sit outside the scope of VAT, so you collect virtually no input VAT to offset against the output VAT on your invoices. A law firm billing £500k in a quarter at 20% owes HMRC £100k but recovers almost nothing on the payroll that generated it. The net liability sits close to the gross figure, and it falls due every 90 days.
A VAT loan pays HMRC directly on the due date and you repay the lender in monthly instalments, usually over three to nine months. The interest cost is modest against the alternative, which is either sitting on that £100k in cash all quarter (dead money) or raiding your working capital at the worst possible moment. We have placed these for consultancies, IT firms, architects and law firms. The lender assesses the VAT return itself, your trading account and a director's personal guarantee. We are a broker, so we cannot set the rate; the lender does that on your business profile. The market for this product is competitive and the facilities are short enough that total cost is usually low in absolute terms.
Key Benefits
- Your VAT liability as a professional services firm is disproportionately large against the input tax you can recover, because wages carry no VAT. A loan makes sense structurally, not just as a cash flow patch.
- Keeping £50k to £100k liquid for payroll and rent instead of parking it at HMRC for a quarter is a real operational difference, particularly if you carry partners or fee-earners on salary.
- The lender works from the VAT return and a short trading history rather than a full credit underwrite. Documentation is light: three to six months of bank statements plus the VAT return is usually enough.
- A short term of three to nine months keeps the total interest cost modest. Most firms find it cheaper than drawing on an overdraft or business credit card to bridge the same gap.
Frequently Asked Questions
Why do service businesses end up with such large VAT bills relative to turnover?
Because your biggest cost, staff, sits outside the VAT system entirely. Salaries, employer NI and pension contributions carry no recoverable input VAT. So when you invoice a client at 20%, nearly the full amount flows through to HMRC with little offset. A consultancy paying £1m a year in salaries and billing £2m in fees could owe £400k in output VAT against almost no input VAT. That structural gap is the reason VAT loans exist.
Can I set up a rolling quarterly facility rather than applying each time?
Some lenders offer an evergreen arrangement: you submit your VAT figure each quarter, they pay HMRC directly, and repayments run automatically. Once the facility is in place the quarterly admin drops to sending the return figure. Not every lender offers this, but we know the ones who do.
What if my firm is a partnership or LLP?
Partnerships and LLPs are eligible. The application goes through in the partnership name, and the lender will usually require personal guarantees from the partners or designated members. The product works the same way; the legal entity assessment differs slightly from a limited company. Note that broking to partnerships can fall under FCA rules depending on the facility, so we confirm the route before we place it.
Will the lender require a personal guarantee?
For limited companies, yes, almost universally. A director's PG is standard on VAT loans of this size. If your firm is a partnership or sole trader, the principal is already personally liable anyway. Worth factoring in before you apply, not after.
Related Funding Options
VAT Loans UK: Spread Your Quarterly VAT Bill
A VAT loan pays HMRC on your behalf and you repay in monthly instalments over 3 to 9 months. We place VAT loans from £5k to £500k for UK limited companies.
Unsecured Business Loans for Professional Services Firms
Unsecured business loans for UK consultancies, law firms, accountancy practices and IT companies. Capital priced on trading strength, not property. We place these deals.
Tax Loans for Professional Services Firms
Spread Corporation Tax and partner Self Assessment bills for UK law firms, consultancies and professional practices. We place tax loans across the market.
Business finance by location
Lender appetite varies by city and region. If you would rather start from where your business is based, these local guides cover the same funding with the local picture.
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Get matched with lendersCoreFi is a trading name of JG Core Ltd (Company #16218779, England & Wales). CoreFi acts as a commercial finance broker and does not provide regulated financial advice. All products described are unregulated business-to-business finance. Information on this page is for general guidance only and does not constitute a formal offer of finance. Terms, rates, and availability are subject to lender criteria and may change without notice.