VAT bridging finance

Funding VAT on Large Transactions

PropertyVAT Team · Updated 21 October 2026 · 3 min read

Above roughly £1m of VAT, the product is the same but the practicalities shift. The things that are minor irritations on a £200,000 facility become material on a £2m one.

Where large VAT bills come from

Industrial and logistics produces these most reliably, because much of the stock is new — and therefore standard-rated automatically — and the lot sizes are large.

What changes at scale

HMRC verification becomes likely rather than possible. A repayment claim is money going out. Larger claims attract more checking before release, particularly from entities with no filing history.

This is not a problem in itself. It is a predictable extension of the timeline, and it belongs in the facility term rather than in a surprise extension request.

The term drives the cost more than the rate. On £2m at 0.03% per day, every day costs £600. The difference between a six-week and a four-month reclaim is roughly £75,000.

Negotiating the rate down by a few basis points is worth a fraction of that. Getting the completion date on the right side of your VAT quarter end is worth far more.

Evidence requirements tighten. Expect to provide more, earlier:

• The contract and full VAT documentation
• Option to tax notification and HMRC acknowledgement
• Clear evidence of intended taxable use
• Filing history where it exists
• Detail on the buying entity and its ownership
• Confirmation of the senior funding structure

The lender pool narrows. Not every VAT lender writes at this scale. Establish capacity early rather than packaging a case for a lender who cannot complete it.

Sizing the facility honestly

The commonest expensive mistake at this level is optimism about the term.

Two factors lengthen a large reclaim predictably:

1. Completing just after a VAT quarter end, which can add close to three months before the return can even be filed
2. Verification, which is likely on a large first claim

Model the realistic case, not the fastest one. Agreeing a longer term at the outset costs less than extending a facility that ran out, and avoids a conversation with the lender you would rather not have.

Reducing the term where you can

• Check your VAT quarter end before agreeing a completion date. On £2m of VAT this is the single highest-value decision available to you.
• Consider monthly VAT returns if you transact regularly — it structurally shortens every cycle.
• Assemble the evidence pack before filing, so a verification request is answered by return rather than compiled from scratch.
• Obtain the seller's VAT invoice on completion day. At this scale, a missing invoice holding up a seven-figure reclaim is an expensive administrative failure.

The stamp duty line

Worth restating at scale, because the numbers stop being trivial.

SDLT is calculated on the VAT-inclusive consideration. On a £12m purchase with £2.4m of VAT, that is roughly £120,000 of additional stamp duty — permanent and unrecoverable, whichever way you fund the VAT.

Which makes the TOGC question disproportionately valuable on large let investments. A successful transfer of a going concern saves the funding cost and that six-figure stamp duty.

This guide is general information, not financial advice. Facility sizes and criteria vary by lender — discuss large cases directly and early.