Accounting period
The period covered by a set of company accounts. For Corporation Tax it is normally twelve months, ending on the company's accounting reference date.
GLOSSARY
The terms, plainly defined.
Fifty-plus UK tax and finance terms explained in plain British English. No jargon explaining jargon.
A
Annual accounting scheme
A VAT scheme that lets eligible businesses file one VAT return a year and make nine interim payments plus a balancing payment. Available to businesses with taxable turnover under £1.35m.
Arrears
Tax that should already have been paid but has not been. Once a bill is past its due date HMRC treats it as arrears and starts charging interest and, depending on the regime, penalties.
Assessment
A formal determination by HMRC of the tax due. Can be raised when a return is missing, suspected wrong, or when HMRC's investigation concludes.
B
Base rate
The Bank of England's official interest rate. HMRC's interest on late paid tax is base rate plus 4%, currently 8.25% per year.
Business Payment Support Service
HMRC's helpline and service for businesses that cannot pay a tax bill on time. The route through which most Time to Pay arrangements are agreed.
C
Cash accounting scheme
A VAT scheme where you account for VAT on the date money is received or paid, not the invoice date. Available to businesses with taxable turnover under £1.35m, useful where customers pay slowly.
CIS (Construction Industry Scheme)
The HMRC scheme covering payments from contractors to subcontractors in construction. Contractors deduct 20% (or 30% for unverified subbies) and pay it to HMRC, which the subcontractor reclaims through their own return.
Commercial finance broker
An intermediary that arranges business finance between borrowers and lenders. In the UK, commercial finance to limited companies and LLPs sits outside FCA scope, unlike consumer credit broking which requires FCA authorisation.
Companies House
The UK registrar of companies. Holds filed accounts, confirmation statements, and company details for every active limited company and LLP.
Compliance check
HMRC's process for reviewing a return or claim it has questions about. Can be light-touch (a single letter) or a full enquiry; the term covers both.
Corporation Tax
The tax limited companies pay on their profits. Due nine months and one day after the end of the accounting period; main rate 25% with marginal relief between £50k and £250k of profit.
Credit
In a tax context, an amount HMRC owes you (e.g. a refundable R&D tax credit). In a finance context, a lender's willingness to lend.
D
DD (Direct Debit)
An automated payment method where the recipient pulls the money from your account on an agreed date. HMRC's preferred way to take VAT and PAYE.
Determination
HMRC's estimate of what you owe when you have not filed a return. Stays in force until you file an actual return that supersedes it; cannot be appealed in the normal way.
DLA (Director's Loan Account)
The running record of money owed between a company and its directors. An overdrawn DLA at year-end can trigger a section 455 charge. A temporary 33.75% Corporation Tax surcharge until repaid.
E
Enquiry
A formal HMRC investigation into a return. Carries the right to ask for records and explanations, and can extend to multiple periods if mistakes are found.
ERIS (Enhanced R&D Intensive Support)
A scheme within the merged R&D regime giving loss-making, R&D-intensive SMEs a higher payable credit rate (currently 27% effective). Eligibility requires R&D spend of 30% or more of total expenditure.
F
Filed accounts
A company's annual accounts as submitted to Companies House. Most lenders want to see at least one. Usually two. Sets of filed accounts before underwriting commercial finance.
Flat rate scheme
A VAT scheme where you charge VAT at the standard rate but pay HMRC at a lower flat rate based on your sector. Simplifies bookkeeping; only worthwhile for businesses with low VATable expenses.
Funding Flow
The parent commercial finance business that operates Tax Bill Loans and its sister brands. Tax Bill Loans, Merchant Business Loans and Invoice Financing all trade as Funding Flow.
Funding Flow family
The collective name for Funding Flow's brand portfolio: Funding Flow (main brokerage), Fundio (broker CRM), Cars on Finance (automotive), Merchant Business Loans (merchant cash advance), Invoice Financing (invoice finance), and Tax Bill Loans (tax-specialist).
G
Gross payment status (CIS)
CIS status that lets contractors pay you without deducting tax. Granted to subcontractors who meet HMRC turnover, business and compliance tests; lost if compliance slips.
H
HMRC
His Majesty's Revenue and Customs. The UK's tax authority. Collects tax, pays out credits and benefits, and runs the Time to Pay scheme.
HMRC determination
HMRC's own estimate of tax owed where a return has not been filed. See Determination.
I
Indicative quote
A non-binding price from a lender or broker, based on summary information rather than full underwriting. Useful for sizing decisions; not an offer.
Input VAT
VAT a business has paid on its purchases of goods and services. Reclaimable on the VAT return if the purchases relate to VAT-taxable business activities.
Interest (HMRC)
Daily interest HMRC charges on late paid tax, calculated at base rate plus 4% (currently 8.25% per year). Accrues from the day after the due date until paid; not tax-deductible.
IR35
The off-payroll working rules, designed to catch contractors who are effectively employees of their client. Since 2021 the engager (in most cases) decides status and operates PAYE if inside IR35.
J
Judgement (CCJ)
A County Court Judgement. A court order that you owe a debt, recorded on your credit file for six years. HMRC rarely pursues CCJs, preferring its own enforcement powers, but commercial lenders do.
L
Late payment penalty
Under the new VAT regime, 2% of unpaid VAT at day 15, a further 2% at day 30, then 4% per annum daily thereafter. Distinct from interest and from late filing penalties.
Lender panel
The set of lenders a broker has commercial relationships with and can place deals into. Larger panels generally mean a better chance of competitive pricing, especially on edge cases.
LLP
Limited Liability Partnership. A partnership where members have limited liability, taxed at the member level on partnership profits. Common structure for accountants, lawyers, and consultancies.
M
Making Tax Digital (MTD)
HMRC's programme to require digital record-keeping and quarterly digital submissions. In place for VAT; rolling out for Income Tax Self Assessment from April 2026 for higher-earning sole traders and landlords.
Merged R&D scheme
The single R&D tax relief scheme that replaced the separate SME and RDEC schemes for accounting periods starting on or after 1 April 2024. A flat 20% above-the-line credit for most claimants, with ERIS for R&D-intensive loss-makers.
N
NIC (National Insurance Contributions)
The UK's social security tax. Paid through PAYE for employees (employer's NIC plus employee's NIC) and through Self Assessment for the self-employed (Class 2 and 4).
O
OSS (One Stop Shop)
The EU VAT scheme letting non-EU sellers (including UK businesses) account for VAT on B2C sales into all 27 EU states through a single quarterly return. Uses your Member State of Identification. For most UK sellers, Ireland.
Output VAT
VAT a business has charged customers on its sales. Owed to HMRC on the VAT return.
P
PAYE
Pay As You Earn. The system for collecting Income Tax and National Insurance from employee wages. Filed via Real Time Information; payment due by the 22nd of each month (or 19th by post).
Payment on account
Self Assessment payments made twice a year (31 January and 31 July) towards the next tax bill, each typically half of the previous year. Catches out the self-employed who treat their January bill as a single number.
Penalty regime
The points-based penalty system that replaced default surcharges for VAT and Self Assessment late filing. Points accrue per missed deadline; reaching the threshold triggers a £200 fixed penalty. Late payment penalties are calculated separately.
Q
Quarterly return
The standard VAT filing frequency. Three rolling VAT quarter cycles spread returns across different months; due date is one month and seven days after the period end.
R
R&D tax credit
A tax relief that rewards qualifying research and development. Either reduces a CT bill or, for loss-making companies, can be paid as cash. Now delivered via the merged R&D scheme or ERIS.
Reverse charge VAT
A mechanism where the customer accounts for VAT on a supply rather than the supplier. Common in B2B services from overseas; the customer adds and reclaims the VAT in the same return.
Reverse VAT charge (construction)
The UK construction-specific reverse charge rules in place since 2021. Means main contractors no longer pay VAT to subcontractors on most construction services; instead they account for it on their own return.
S
SA (Self Assessment)
The system for individuals. Sole traders, landlords, partners, higher earners. To declare income and pay tax. Returns due 31 January following the tax year; balancing payment and first payment on account due same date.
SDLT
Stamp Duty Land Tax. Payable on UK property purchases above a threshold. Outside the scope of regular tax-bill funding but occasionally bundled with completion finance.
SME R&D scheme
The pre-April 2024 R&D relief regime for small and medium enterprises, giving an enhanced deduction or payable credit. Replaced for new accounting periods by the merged scheme and ERIS.
Stagger (VAT)
Broker and accountant term for the VAT return cycle a business is on. On this site we use the plain-English version: 'VAT quarter'. The three patterns are March/June/September/December, April/July/October/January, and May/August/November/February, based on which months your VAT period ends.
Surcharge
The penalty under the old default surcharge regime for late VAT, calculated as 2%, 5%, 10% or 15% of the unpaid VAT depending on how many slips in twelve months. Replaced for VAT periods starting 1 January 2023 by the new penalty regime.
T
Trading status
Whether a company is actively trading. Lenders generally require at least 3-6 months of trading history before underwriting an unsecured loan; some specialists go shorter at higher rates.
TTP (Time to Pay)
HMRC's instalment arrangement for businesses and individuals that cannot pay a tax bill on time. Self-serve online for VAT debts under £50k and SA debts under £30k; phone-based above that. Interest still accrues but late payment penalties can be cancelled.
Turnover
Gross sales before any costs. Different from profit; relevant for VAT registration thresholds, R&D scheme eligibility, and lender pricing bands.
U
Unsecured loan
A loan that does not take a charge over specific business assets. Most commercial finance for SMEs still requires director personal guarantees, and on larger or higher-risk deals lenders may also require an equitable charge or debenture against business or personal property. "Unsecured" rarely means "no recourse".
UTR (Unique Taxpayer Reference)
The 10-digit reference HMRC issues to each taxpayer (and separately to each company). You will need it on returns, payments, and any correspondence.
V
VAT
Value Added Tax. A consumption tax charged on most goods and services in the UK at 20%, with reduced (5%) and zero rates for certain supplies. Collected by VAT-registered businesses on behalf of HMRC.
VAT 652
HMRC form used to correct an error on a previously submitted VAT return. Required if the error is over the de minimis threshold or you wish to formally disclose.
VAT loan
A short-term commercial loan used to pay a VAT bill direct to HMRC, repaid in fixed instalments over 3 to 12 months. Lets a business smooth a lumpy quarterly payment without burning cash reserves.
VAT Reclaim funding
A commercial finance product that advances HMRC VAT repayments. Funds the refund quickly after HMRC verification, with HMRC paying the lender directly when the standard repayment processes. Fees usually 2% to 4% of the refund amount.
VAT registration threshold
The annual taxable turnover above which a UK business must register for VAT. Currently £90,000 (raised from £85,000 in April 2024); voluntary registration is available below.
VAT repayment
When input VAT on a return exceeds output VAT, HMRC owes the business the difference. Repayments are usually processed within 30 days of return submission, though around 10% face deeper compliance review.
Voluntary disclosure
Telling HMRC about an error or under-declaration before they find it. Materially reduces the penalty multiplier; the Digital Disclosure Service is the standard route.
W
WIP (Work in Progress)
Work that has been done for a client but not yet invoiced. Sits as an asset on the balance sheet; common in professional services and construction. A high WIP balance often hides a working capital problem.
Withholding tax
Tax deducted at source by the payer rather than collected from the recipient. UK examples include PAYE on wages and CIS deductions on construction payments.
Y
Year-end
A company's accounting reference date. The last day of its accounting period. Determines when accounts and CT are due (9 months and 1 day later for CT).
Z
Zero-rated supplies
Goods or services that are VAT-taxable at 0%. Businesses making zero-rated supplies can still reclaim input VAT on related purchases. Common for exports, most food, children's clothing, and books.