Jonny Towers

Jonny Towers

VAT Funding Explained

We hope this page will help you better understand BloomSmith’s facilities and VAT funding In General

What is a BloomSmith VAT loan?

A BloomSmith VAT loan allows you to raise short term finance to cover the VAT element due on the purchase of you or your client’s commercial property. This ensures that the deal completes and the BloomSmith structure ensures that your equity is safe and HMRC repay your loan for you.

When is VAT chargeable on a commercial property?

Where a property has been elected for VAT and the owner has registered his interest in that property and has registered for VAT themselves.
This is referred to as an “opted in” commercial property and the vendor is able to issue a VAT qualifying invoice for the purchase of the property to the purchaser.

Can you reclaim the VAT on commercial property transactions from HMRC?

You can reclaim the VAT but first it must be paid.
The reclaim takes place if HMRC approve transaction once the reclaim is submitted following the purchase. BloomSmith manage this process for you as part of their service.

Reclaims typically take between 45 to 120 days from the date of payment (purchase) and recovery. This effects cash flow and potential opportunity. A BloomSmith VAT loan enables you to focus on the next transaction rather than allocating cash to HMRC.

What amount can you borrow under a VAT funding loan?

We do not have a minimum loan, we can facilitate up to £20 million plus.

Is it possible/normal to borrow 100% of the VAT charge?


Do BloomSmith take security on your property?


What security is required?

None we lend on process.
We just require you to form a new SPV outside of a group structure and verification of the legitimacy of the seller charging VAT. The loan is secured on recovery from HMRC rather than on available equity in the property.

What is a VAT funding Loan?

A VAT funding loan is a short-term loan that covers the VAT on a property/ land/ development for a short period of time, that is reclaimable from HMRC. BloomSmith facilitates that reclaim, and this is generally within 60-90 days.

Is this normal in the market?

Other lenders require a second charge on the property as security for the loan. BloomSmith do not require this as in our experience the better borrowers do not like to subsume their equity.

Reclaiming the VAT from HMRC

BloomSmith provide a fully managed option which means that they will oversee the recovery of the VAT direct from HMRC and dealing with all enquiries.
Being experienced in dealing with the VAT recovery process, this can speed up recovery, reducing interest payment costs by reducing the term of the loan.

What are the advantages of BloomSmith VAT provision?

It’s fast.
There is a simple predictable process.
Your equity remains free for other deals.
You’re given support to manage VAT purchase risk and you HMRC reclaim.

Get in touch

To hear more about our processes or enquire further, you can call us on 020 3488 3411 or fill out our enquiry form
Neil Petty // Director // 07970740360
Nigel Smith // Director // 07770914594

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