Merchant Cash Advance With HMRC Debt UK: Can You Qualify in 2026?
By Jodhbir Mehmi | Mehmi Financial Group
Research reviewed: 18 October 2026
Can you get a merchant cash advance with HMRC debt in the UK? Potentially, yes. Having outstanding VAT, PAYE, Corporation Tax or other HMRC liabilities does not automatically mean every merchant cash advance provider will decline your business.
However, eligibility depends on the nature of the tax debt, whether HMRC has agreed to a payment arrangement, the company's trading performance and its ability to support additional financing.
A business with an affordable HMRC Time to Pay arrangement and consistent card sales may present a different financial position from one with several missed tax payments, active enforcement action and insufficient operating cash flow.
Merchant cash advance providers generally assess future sales receivables, but they may also examine existing financial obligations, credit information, bank account conduct and potential insolvency risks.
For example, a restaurant processing £50,000 in monthly card sales with a manageable VAT payment arrangement may warrant consideration by a funding provider.
However, a business with the same sales but escalating HMRC arrears, missed payroll obligations and an outstanding winding-up petition presents substantially greater risk.
The existence of HMRC debt does not establish approval or rejection by itself. No universal UK merchant cash advance rule specifies the maximum amount of tax arrears a business can have.
This guide explains how HMRC debt can affect merchant cash advance eligibility, the difference between VAT and PAYE arrears, how Time to Pay arrangements work, what funding providers may assess and when alternative solutions could be more appropriate.
Can You Get a Merchant Cash Advance if You Owe HMRC Money?
Potentially.
Some UK merchant cash advance providers consider businesses with less-than-perfect financial histories.
Unlike certain conventional bank loans, a merchant cash advance is commonly structured as the purchase of future commercial sales receivables.
Funding providers may therefore place considerable weight on recent card-processing activity and the business's ability to generate future qualifying sales.
However, outstanding HMRC liabilities represent an existing financial commitment and may indicate cash-flow pressure.
An applicant with tax arrears could be assessed differently depending on whether those arrears are being addressed.
Business With an Active HMRC Payment Plan
A business that has agreed to repay outstanding tax through manageable instalments may be able to demonstrate that it is addressing its liabilities.
If the company continues to meet its payment-plan obligations, submit returns and pay new taxes when due, this may provide useful evidence of financial management.
However, a payment arrangement does not guarantee that an MCA provider will accept the application.
Business With Unpaid Tax and No Arrangement
A company with overdue tax and no agreed repayment arrangement may present greater uncertainty.
The funding provider may need to establish whether the business can realistically pay HMRC while meeting normal operating expenses and additional MCA collections.
Business Facing HMRC Enforcement
Where HMRC has commenced serious debt-recovery action, the financing assessment becomes substantially more complex.
A winding-up petition, insolvency proceedings or restrictions affecting access to company assets may create significant barriers to obtaining new finance.
In these situations, specialist legal or insolvency advice should take priority over submitting additional financing applications.
What Types of HMRC Debt Can Affect MCA Eligibility?
Different types of tax arrears can raise different financial concerns.
VAT Arrears
VAT arrears arise when a VAT-registered business does not pay the amount due to HMRC by the relevant deadline.
For example, a restaurant may collect VAT from customers but experience cash-flow difficulties after paying wages, suppliers and commercial rent.
If insufficient money remains when its VAT liability falls due, the business may fall into arrears.
A merchant cash advance provider may consider the unpaid balance, whether further VAT liabilities are becoming due and whether the proposed collections would make future payments more difficult.
VAT arrears can be particularly important because the business may be collecting VAT within its gross card receipts.
PAYE and National Insurance Arrears
Employers generally deduct PAYE Income Tax and employee National Insurance contributions from employees' earnings and account for the relevant liabilities to HMRC.
A business with unpaid PAYE may face questions about its ability to meet payroll-related obligations.
The provider may also consider whether the business can continue paying new payroll taxes after financing.
Corporation Tax Arrears
A limited company may owe Corporation Tax on taxable profits from a previous accounting period.
Corporation Tax debt may therefore arise even when current trading conditions have deteriorated.
A financing provider may consider whether the amount represents a temporary cash-flow issue or evidence that the company has insufficient available resources.
Self Assessment Arrears
Sole traders and certain other business owners may have personal Self Assessment liabilities.
These are not automatically the same as tax debts owed by a separate limited company.
However, they may be relevant where the individual is the financing applicant or where the provider evaluates an owner's wider financial circumstances.
Construction Industry Scheme Arrears
Construction businesses may have obligations relating to Construction Industry Scheme (CIS) deductions.
Outstanding CIS liabilities can create additional tax and compliance concerns.
The relevant funding provider will determine how these obligations affect its assessment.
Does an HMRC Time to Pay Arrangement Help MCA Eligibility?
An agreed HMRC Time to Pay arrangement can provide evidence that the business has taken steps to address outstanding tax.
However, it should not be interpreted as automatic permission to obtain additional financing.
What Is HMRC Time to Pay?
HMRC offers eligible taxpayers the possibility of paying overdue tax through an agreed instalment arrangement.
Under a Time to Pay arrangement, the business agrees to pay its outstanding liability over a period that HMRC considers realistic and affordable.
The terms depend on the taxpayer's financial position and the type and amount of tax owed.
According to HMRC's Time to Pay guidance, businesses may be required to provide details of their income, expenses, bank accounts and ability to make payments.
HMRC may also consider whether the business has assets that could be used to reduce the outstanding liability.
How Long Can a Time to Pay Arrangement Last?
There is no single repayment period guaranteed to every business.
HMRC's internal guidance states that arrangements for business taxes are generally expected to be shorter than 12 months.
Longer periods may be considered in exceptional circumstances.
The duration depends on affordability, the business's financial situation and HMRC's assessment.
What Are the Conditions of Time to Pay?
HMRC expects taxpayers to comply with the terms of an agreed arrangement.
Its published guidance includes requirements to disclose relevant outstanding HMRC debts, submit future tax returns on time and pay new liabilities when they become due, subject to any agreed exceptions or revisions.
The business must also communicate material changes affecting its ability to pay.
An arrangement may be cancelled if the taxpayer fails to comply with the agreed conditions.
See HMRC's Time to Pay conditions.
Does HMRC Continue Charging Interest?
Yes, where applicable.
Agreeing to a Time to Pay arrangement does not automatically stop late-payment interest.
HMRC generally continues to charge applicable interest on outstanding tax until the liability has been paid.
The treatment of penalties depends on the relevant tax and circumstances.
The business should therefore review the total expected cost of a payment arrangement before comparing it with another financing product.
Does a Time to Pay Plan Guarantee MCA Approval?
No.
A funding provider may still consider HMRC arrears a significant risk, even where a payment plan is being maintained.
The provider's assessment could include the remaining tax debt, monthly HMRC instalments, recent sales, cash flow and other financial obligations.
There is no verified universal rule requiring merchant cash advance providers to accept applicants simply because they have an HMRC payment arrangement.
Can You Use a Merchant Cash Advance to Pay HMRC Debt?
Potentially, where the funding agreement permits that purpose and the provider accepts the applicant's circumstances.
Some commercial financing products allow businesses to use proceeds for working capital or payments to existing creditors.
However, a merchant cash advance provider's general permission to use funds for business expenses does not guarantee that it will fund an applicant specifically seeking to settle overdue HMRC liabilities.
The intended use of funds should be disclosed accurately.
There is also a significant financial consideration.
Paying an outstanding tax liability using a merchant cash advance may replace one obligation with another that has a substantial fixed financing fee and frequent deductions from sales.
The company may eliminate its immediate HMRC debt while creating a new cash-flow burden.
Does HMRC Require Businesses to Borrow Money?
HMRC's payment-plan guidance explains that it may ask company directors to consider steps such as providing personal funds, obtaining lending or extending credit to help address tax liabilities.
However, this does not mean a business is automatically required to accept an expensive merchant cash advance.
Any borrowing decision must be considered against the company's financial position, contractual obligations and directors' duties.
Where insolvency is a possibility, the business should obtain professional advice before entering additional finance.
Example: Using an MCA to Clear £12,000 in HMRC Arrears
Consider a hypothetical UK retail business owing £12,000 in overdue VAT.
The business processes approximately £30,000 in qualifying card transactions every month.
It is considering two possible approaches.
Option 1: HMRC Time to Pay
Suppose HMRC agrees to a hypothetical arrangement requiring payments of £1,000 each month towards the outstanding principal over 12 months.
Applicable late-payment interest would also need to be accounted for, so the actual total and payment schedule could be higher.
The business would continue paying current tax liabilities while maintaining the arrangement.
HMRC approval for these exact terms is not guaranteed.
Option 2: Merchant Cash Advance
Suppose a third-party funding provider offers a hypothetical £12,000 merchant cash advance.
The financing carries a fixed fee of £3,000.
The total contracted remittance would therefore be £15,000.
If the provider collects 12% of qualifying card sales, approximately £3,600 would be collected each month at the assumed £30,000 sales level.
At constant sales, the £15,000 obligation would take approximately 4.2 months to satisfy.
The £3,000 fee represents 25% of the amount advanced.
This is not equivalent to a 25% APR, and the effective annualised cost can be substantially higher.
Which Option Is Better?
The answer depends on the actual terms and financial circumstances.
The MCA in this illustration would collect a substantially larger amount each month than the proposed HMRC principal instalment.
Although settling the HMRC debt immediately could reduce continuing tax interest, the fixed funding fee may outweigh that benefit.
The business would also need to continue meeting its future VAT obligations.
A merchant cash advance should not automatically be treated as the preferable solution to an affordable HMRC payment arrangement.
These examples are illustrative, not available lender offers or confirmed HMRC arrangements.
How HMRC Debt Affects Merchant Cash Advance Underwriting
An MCA provider may assess several factors beyond the amount of tax outstanding.
Amount of HMRC Debt
The absolute amount matters, but so does its relationship to business turnover and available cash flow.
A £5,000 tax liability may represent a relatively manageable obligation for a company with substantial recurring revenue.
The same amount could create serious financial pressure for a smaller business with limited available cash.
There is no universal maximum HMRC arrears amount accepted by UK MCA providers.
Status of the Tax Debt
A funding provider may distinguish between an agreed payment arrangement, overdue liabilities without an arrangement, missed instalments and active enforcement.
These circumstances create different financial and legal risks.
Monthly HMRC Payments
Where a business has a Time to Pay arrangement, the required instalments represent an existing cash-flow commitment.
An MCA provider may need to determine whether the business can support both the HMRC payments and proposed financing collections.
Recent Card Sales
Merchant cash advances generally depend on qualifying debit and credit card transactions.
A company with consistent sales may provide a stronger future-receivables profile than one experiencing substantial revenue declines.
However, sufficient card sales alone do not guarantee affordability or approval.
Business Bank Statements
Recent bank statements may reveal payments to HMRC, existing finance collections, returned direct debits and cash-flow pressure.
Providers may request an explanation of unusual transactions or significant outstanding liabilities.
Credit and Insolvency Information
Some MCA providers conduct business or owner credit checks and assess insolvency records.
For example, Worldpay Business Finance, provided through Liberis, confirms that its full underwriting process includes credit, affordability and insolvency assessments.
The presence of HMRC arrears can be relevant even where the company continues to generate substantial card revenue.
Which UK Merchant Cash Advance Providers May Consider HMRC Debt?
UK merchant cash advance providers use different underwriting policies.
However, publicly advertised MCA eligibility criteria generally do not establish that an applicant with active HMRC arrears will be accepted.
A provider that considers businesses with adverse credit should not automatically be described as a lender that accepts outstanding tax debt.
365 Finance
365 Finance offers merchant cash advances to eligible UK businesses.
Its main published eligibility criteria include at least six months of trading and approximately £10,000 or more in monthly card sales.
The provider also indicates that poor credit history or a previous bank loan decline does not necessarily prevent consideration.
However, these statements do not confirm acceptance of applicants with unpaid HMRC tax liabilities.
Businesses with HMRC arrears should disclose the circumstances and confirm whether the provider is willing to assess the enquiry.
Worldpay Business Finance Through Liberis
Worldpay Business Finance provides financing through Liberis.
Its programme considers qualifying Worldpay card transactions, trading history, credit information and affordability.
Worldpay states that eligible merchants generally need more than £1,000 in monthly qualifying card sales and at least 10 transactions.
However, meeting those thresholds does not confirm eligibility for a business with HMRC debt.
A company with tax arrears should clarify whether its existing liabilities are acceptable to the provider before proceeding with a full application.
Other Commercial Finance Providers
Some independent commercial finance providers may evaluate businesses using banking records, cash flow, available assets or qualifying invoices rather than relying exclusively on card transactions.
However, approval with outstanding HMRC debt remains provider-specific.
A company should not assume that a broker can eliminate underwriting concerns simply by sending the application to multiple funders.
The objective should be to identify whether any suitable financing structure is affordable and genuinely available.
For broader provider comparisons, read Merchant Cash Advance Lenders UK and Merchant Cash Advance Requirements UK.
The Biggest Risk: Adding MCA Collections to HMRC Payments
A business with existing HMRC arrears already has financial obligations that must be addressed.
Adding a merchant cash advance creates a further claim on future customer receipts.
Example: £30,000 Monthly Card Sales With HMRC Payments
Consider a hypothetical restaurant generating £30,000 in eligible monthly card sales.
After relevant variable operating costs, suppose it has £9,000 in contribution before fixed overhead.
The restaurant then has £4,000 in fixed operating expenses.
It also needs to reserve £1,500 for its current tax obligations.
An existing HMRC Time to Pay arrangement requires a further £1,000 each month.
This leaves approximately £2,500 in cash before any new MCA collections.
Now suppose the restaurant obtains an additional advance collecting 12% of qualifying card sales.
That would result in approximately £3,600 in monthly collections at the assumed sales level.
The business would then face an illustrative monthly shortfall of £1,100 after the stated commitments.
This example assumes the HMRC payment arrangement remains in place and the MCA is used for additional working capital rather than directly settling the tax debt.
If the advance is instead used to clear the existing HMRC debt, the old instalment may end, but the larger MCA deductions could still reduce available operating cash.
The critical issue is whether sufficient money remains after all obligations—not merely whether the business has enough card sales to qualify for consideration.
All figures are hypothetical.
Does HMRC Debt Affect Your Business Credit Score?
Outstanding HMRC tax does not necessarily appear on a company's credit report in the same way as a conventional commercial loan.
However, the wider circumstances surrounding unpaid tax can affect the business's financial standing.
For example, court judgments, insolvency proceedings, missed finance payments or other public records may be relevant to credit assessments.
A funding provider may also identify tax-related obligations through banking records or information supplied in the application.
Therefore, the absence of a specific HMRC debt entry from a credit report should not be interpreted as evidence that the liability is irrelevant or does not need to be disclosed.
A business should answer all application questions accurately.
What Happens if HMRC Takes Enforcement Action?
HMRC has a range of debt-recovery powers where tax liabilities remain unpaid.
According to GOV.UK guidance on unpaid tax, HMRC generally attempts to contact the taxpayer and discuss available options before taking enforcement action, except in certain circumstances.
Where liabilities remain unresolved, potential action can include collection agencies, recovery from bank accounts where legal conditions permit, court proceedings and formal insolvency action.
HMRC Payment Demands
A company that receives demands for overdue tax should respond promptly.
Ignoring correspondence can increase the likelihood of enforcement and additional costs.
Missed Time to Pay Instalments
HMRC may contact the taxpayer to discuss a missed instalment or possible revised arrangement.
However, continued non-compliance can result in cancellation of the plan and recovery action.
Winding-Up Petitions
Creditors, including HMRC, may seek compulsory liquidation of a company that cannot pay its debts.
A winding-up petition is a serious legal matter and can create substantial operational and financing risks.
If a winding-up order is made, the company's bank account will usually be frozen and control of its affairs passes into the relevant insolvency process.
A business facing this situation should obtain urgent advice from a qualified insolvency practitioner or solicitor.
Taking a merchant cash advance is not a substitute for responding to HMRC enforcement or obtaining appropriate insolvency advice.
HMRC's Priority in a Business Insolvency
Outstanding tax has particular significance where a business becomes insolvent.
Under rules applying to formal insolvency proceedings commencing on or after 1 December 2020, HMRC has secondary preferential status for specified taxes.
These include VAT, PAYE Income Tax, employee National Insurance contributions and certain other deductions collected on behalf of individuals.
By contrast, Corporation Tax and employer National Insurance contributions are generally outside this particular category of secondary preferential HMRC debts.
This distinction affects how certain creditors rank in formal insolvency proceedings.
It does not mean that one type of outstanding tax is automatically acceptable to an MCA provider while another is not.
See HMRC's official preferential creditor guidance.
What About Directors' Personal Liability?
Company tax debts generally belong to the limited company rather than automatically becoming personal debts of its directors.
However, personal liability can arise in particular circumstances, including certain guarantees, statutory notices or misconduct.
If a company may be insolvent, directors have additional duties towards creditors.
The Insolvency Service advises directors to protect company assets, avoid worsening creditors' positions and consider professional insolvency advice.
Entering expensive additional funding when the company cannot meet its obligations can create further legal and financial risks.
Is HMRC Time to Pay Better Than a Merchant Cash Advance?
For some businesses, negotiating an affordable payment arrangement with HMRC may be preferable to obtaining expensive external funding.
A Time to Pay arrangement allows eligible tax debt to be repaid through instalments, subject to HMRC's approval and applicable interest.
An MCA introduces a separate contractual obligation and financing fee.
However, Time to Pay may not be available on the terms requested by the business.
The best option depends on the company's tax liabilities, financial position and realistic ability to pay.
When Time to Pay May Be More Suitable
A payment arrangement may be worth prioritising where the business is viable, the arrears are manageable and future tax liabilities can be paid when due.
For example, an established business may have experienced a temporary cash-flow interruption but expect reliable future revenue.
If HMRC accepts affordable instalments, the business may be able to address the tax debt without immediately committing a large share of card revenue to an MCA.
When External Financing Might Be Considered
Commercial financing may warrant consideration where the business has a credible cash-flow forecast, an identifiable funding requirement and sufficient capacity to meet both current and future obligations.
However, a company should compare the cost of external financing against the actual HMRC payment options available.
When Neither May Be Appropriate
If the company cannot meet operating costs, current tax liabilities and existing creditor payments, neither additional financing nor a proposed instalment arrangement may solve the underlying problem.
A qualified insolvency practitioner or restructuring adviser may be better positioned to assess the available options.
Alternatives to an MCA When Your Business Owes HMRC
A merchant cash advance is not the only possible response to outstanding tax debt.
HMRC Time to Pay
The first step for many businesses is to communicate with HMRC and determine whether an affordable payment arrangement is available.
This option should be investigated before assuming that external borrowing is necessary.
Conventional Business Lending
An established company may be able to explore a commercial business loan.
However, outstanding HMRC liabilities can affect underwriting.
Lenders may require additional evidence of affordability, and certain tax-debt situations may result in a decline.
A conventional loan should not be assumed to be available simply because an MCA is unsuitable.
Invoice Financing
Businesses with eligible unpaid commercial invoices may be able to release working capital through factoring or invoice discounting.
This may be relevant where customers pay on contractual terms rather than through card terminals.
However, HMRC arrears, insolvency risk, existing security and the nature of the receivables can affect availability.
Asset-Based Financing
An established business with suitable equipment, receivables or other acceptable assets may investigate asset-based financing.
The provider will need to assess the value of the assets, existing charges, creditor priorities and company financial condition.
Outstanding HMRC tax can complicate these arrangements.
Business Restructuring
For businesses experiencing persistent financial distress, formal or informal restructuring may be more appropriate than additional high-cost financing.
Available options depend on the legal structure, financial position and jurisdiction.
Professional advice is important before taking steps that affect creditor rights.
The British Business Bank's working-capital finance guide explains a range of commercial finance alternatives.
What Documents Should You Prepare if You Have HMRC Debt?
An applicant with outstanding tax should be prepared to explain the circumstances accurately.
Some providers may request more information than they would for an otherwise similar business without arrears.
Relevant documentation may include recent business bank statements, merchant-processing reports, financial statements and company ownership information.
The business should also be prepared to provide appropriate evidence of its HMRC position if requested.
This may include the type and amount of tax outstanding, relevant HMRC correspondence, an agreed Time to Pay schedule and records showing that payments have been maintained.
Where the liability is under dispute, the business should explain that distinction and provide appropriate supporting information.
The provider may also request details of existing loans, overdrafts and merchant cash advances.
Never conceal HMRC liabilities or provide altered tax or banking documents to a financing provider.
Material misrepresentations can affect eligibility and create additional contractual or legal consequences.
Sensitive tax and banking information should be submitted only through appropriate secure channels.
How to Apply for an MCA With HMRC Debt
Before applying for additional business funding, establish the status of your tax liabilities and whether the business can realistically afford more financing.
- Confirm the amount owed to HMRC. Identify the tax type, outstanding balance, due dates and any applicable interest or penalties.
- Review HMRC correspondence. Determine whether the liability is subject to an existing payment arrangement, a demand for payment or active enforcement.
- Contact HMRC where necessary. Discuss available payment options and obtain an accurate understanding of the obligations that must be met.
- Prepare a cash-flow forecast. Include normal operating expenses, future tax liabilities, existing HMRC instalments and other financial commitments.
- Calculate qualifying card revenue. Review recent debit and credit card transactions separately from bank-transfer or cash income.
- Identify the funding purpose. Determine whether the proposed advance will settle existing tax, provide additional working capital or support another commercial requirement.
- Confirm provider policy. Ask whether the provider considers applicants with the specific type and status of HMRC debt involved.
- Review any actual offer. Compare the total financing cost, percentage of sales collected, guarantees and other contractual obligations.
- Obtain professional advice where appropriate. If insolvency or creditor enforcement is a concern, consult a suitably qualified adviser before accepting additional finance.
For further information about application requirements, visit Merchant Cash Advance Application UK.
Frequently Asked Questions About MCA Funding With HMRC Debt
Can I get a merchant cash advance with HMRC debt in the UK?
Potentially. There is no universal statutory ban solely because a business owes HMRC. However, individual finance providers may decline applicants with tax arrears, and approval depends on underwriting and affordability.
Can I get an MCA with VAT arrears?
Potentially, depending on the funding provider, amount outstanding, enforcement status and the business's financial position. VAT arrears are not automatically acceptable to all MCA providers.
Can I get business funding with PAYE arrears?
It may be possible to explore financing, but unpaid PAYE can raise material financial concerns. Providers may assess whether the business can meet both existing and future payroll tax obligations.
Can I get an MCA while on an HMRC Time to Pay plan?
Potentially. However, an active payment plan does not guarantee approval. The financing provider may consider the outstanding balance, monthly instalments and whether enough cash remains for additional collections.
Does HMRC Time to Pay improve approval chances?
A maintained payment arrangement may help demonstrate that the business is addressing its liabilities. However, no universal provider policy establishes that a Time to Pay arrangement makes an applicant eligible.
Can I use MCA funding to pay off HMRC?
Potentially, if the funding provider permits that use and accepts the application. The business should compare the total MCA financing cost with the amount required to address the tax debt.
How much HMRC debt is too much for an MCA?
There is no verified universal threshold. A provider may assess the amount owed relative to cash flow, eligible sales, existing obligations and the legal status of the debt.
Can I get an MCA with £10,000 in HMRC arrears?
Potentially, but the £10,000 balance alone is insufficient to predict approval. The outcome depends on the business's revenue, financial condition and provider policy.
Can I get an MCA with £50,000 in HMRC debt?
A substantial tax liability may create significant underwriting and affordability concerns. Funding cannot be assumed, and professional restructuring advice may be appropriate.
Can I get an MCA if HMRC has started enforcement?
Serious enforcement can create major financing barriers. If the business faces a winding-up petition or insolvency proceedings, seek urgent professional advice rather than relying on a speculative funding application.
Does HMRC debt automatically appear on my business credit report?
Not necessarily. However, related court judgments, insolvency records or other financial events may be relevant to credit assessments. A lender may also discover obligations through its normal verification process.
Can I get a merchant cash advance with bad credit and HMRC arrears?
Potentially, but the combination of adverse credit and outstanding tax can increase financial risk. Providers will assess the wider circumstances rather than card sales alone.
Does a merchant cash advance require collateral?
Some MCAs do not require conventional property or equipment collateral. However, personal guarantees or other contractual protections may apply.
Can a sole trader obtain an MCA with Self Assessment debt?
Potentially, depending on the funding programme and financial circumstances. A sole trader is generally personally responsible for business obligations, so personal tax liabilities may also affect affordability.
Is it cheaper to pay HMRC through Time to Pay?
It can be, but the actual comparison depends on the applicable tax interest, penalties, instalment terms and the cost of any alternative financing offer. Do not assume one option is always cheaper without calculating the full cost.
Does an MCA stop HMRC enforcement?
No. Obtaining funding does not automatically suspend HMRC recovery action. The taxpayer must communicate with HMRC and resolve the liability through an appropriate agreed or legally effective process.
Can a business obtain funding if it has missed Time to Pay instalments?
Possibly, but missed arrangements can create serious concerns. The business should contact HMRC promptly and address the status of the arrangement before relying on new financing.
Should I take an MCA to pay old VAT bills?
Not automatically. Replacing VAT arrears with a high-cost financing obligation may reduce available cash for future VAT and normal operating expenses. Compare available HMRC arrangements and seek professional advice when appropriate.
Final Thoughts: Is a Merchant Cash Advance Suitable When You Owe HMRC?
A merchant cash advance may be worth investigating for certain UK businesses with outstanding HMRC liabilities.
However, tax arrears create financial and contractual considerations that do not arise in every funding application.
The distinction between an affordable Time to Pay arrangement and serious unresolved enforcement is particularly important.
Businesses with established card revenue, a manageable tax position and sufficient cash flow may be better positioned for consideration than those experiencing continuing financial distress.
Nevertheless, a merchant cash advance should not automatically be used to replace overdue tax liabilities.
Its fixed financing fee and deductions from future sales can create additional pressure on the business.
Before accepting an offer, understand the exact HMRC balance, future tax obligations, existing financing commitments and cash remaining after proposed collections.
Where the business is already unable to meet its debts as they fall due, qualified restructuring or insolvency advice should take priority.
The appropriate objective is not simply obtaining finance despite HMRC debt. It is finding a sustainable way to address the business's obligations without making its financial position worse.
Explore UK Business Financing Options With Mehmi Financial Group
Does your UK business have HMRC arrears and need to review its commercial funding options?
Mehmi Financial Group helps commercial businesses explore financing opportunities through third-party providers, subject to applicable jurisdictional requirements and programme availability.
If your company has outstanding tax obligations, understanding the financial position and status of those liabilities is an important first step.
We can review an initial enquiry and determine whether an appropriate financing introduction or referral route is available.
To begin, provide your business location, industry, trading history, approximate monthly revenue, qualifying card sales, funding amount required and the general status of any existing HMRC payment arrangements.
Where the business is facing active enforcement or possible insolvency, independent specialist advice should be obtained before pursuing additional finance.
Contact Mehmi Financial Group to Discuss UK Business Financing Options
Mehmi Financial Group is a Canada-based commercial financing brokerage, not a bank or direct lender. We do not provide HMRC tax representation, insolvency advice or legal services. UK financing introductions depend on applicable local requirements and participating third-party provider availability. No approval, financing amount, pricing or funding timeline is guaranteed. Referral fees or commissions may apply. Do not submit sensitive HMRC credentials or complete financial documents through an initial general enquiry.
About the Author
Jodhbir Mehmi is a commercial finance specialist at Mehmi Financial Group with experience in business financing, equipment financing, underwriting preparation and commercial funding submissions.
His work includes reviewing business financing requirements, assessing existing financial commitments and helping commercial clients understand potential funding structures.