In construction and the trades, money you have genuinely earned can sit with HMRC for weeks. A contractor deducts tax under the Construction Industry Scheme before paying your company, or you file a VAT return that puts you in a repayment position — and then the offset or refund lands later than the bills it was meant to cover. A Credicorp facility lets a UK limited company or LLP bridge that interval, keep crews and suppliers paid, and repay once HMRC settles up.
Why CIS and VAT create a refund-timing gap
The two squeezes are distinct, but they hit the same trade businesses. Under CIS, a contractor withholds a percentage of your labour element and pays it to HMRC on your behalf. If your company is a subcontractor, those deductions are credits you have already funded — but you only recover them through your payroll (RTI) offset across the tax year, or as a refund after the year end, not on the day the cash is withheld. Meanwhile VAT can swing you into a repayment position when a quarter is heavy on materials, plant hire, or zero-rated new-build work, so HMRC owes you. Either way the benefit is real and quantified, yet wages, plant, fuel and merchant accounts all fall due now.
What "bridging a refund" actually means
Bridging a CIS or VAT refund does not mean borrowing against a hopeful number. It means using a short-term business facility to cover a defined gap where the incoming amount is already worked out — a CIS deduction total your bookkeeper can evidence, or a VAT return you have filed showing a repayment due — and then clearing the facility when HMRC pays. The lending is to your company on its own merits: we underwrite your trading and affordability, not the refund itself. The HMRC payment is your repayment plan, not our security, and there is no director personal guarantee.
How the facility works
- Apply as a UK limited company or LLP, stating the business purpose of bridging an expected CIS or VAT refund.
- We assess your company's trading and affordability. If we can help, the term and rate are set out in your offer document — we never quote a price before underwriting.
- You draw the funds and keep the job moving, paying the subcontractors, merchants and plant hire the work depends on.
- When the CIS offset or VAT repayment comes through, you repay over the agreed term.
Bridge with headroom, not on hope
Only bridge against a refund you are genuinely confident of receiving, and leave room in case HMRC pays later than expected or opens a check on the figures. Treat your accountant's view of the amount and timing as the anchor, reconcile your CIS deductions properly, and make sure your forecast can carry the repayments even if the money slips a month. If late customer payments — not HMRC — are the real cause, that is a different problem to solve, so be honest about which gap you are funding.
Credicorp lends only to UK limited companies and LLPs for business purposes. We do not lend to individuals or sole traders, and we take no personal guarantee from directors. As an exempt business lender we sit outside the FCA consumer-credit regime, so the Financial Ombudsman Service and FSCS do not apply. Choose between Credicorp Flex and Credicorp Slice based on which repayment shape suits your cash cycle, and review the figures in your offer against your forecast before you draw.
Related reading
- Using a Credicorp facility to fund a VAT bill — the other side of the VAT cycle, when you owe rather than reclaim.
- Bridging an R&D tax credit claim — the same wait-on-HMRC pattern for innovation relief.
- Financing tools and kit for a trades business — equipping the company to take on more work.
- Can business finance help bridge a short-term cashflow gap? — the general timing-gap picture.
See also: Bridging the gap between one contract ending and the next starting, Bridging the gap between one contract ending and the next, Bridging while you wait for a grant or R&D tax credit.