Manufacturing company with HMRC arrears
UK manufacturing files with HMRC arrears are often declined by mainstream banks but may be considered by specialist lenders. Three live routes: invoice finance against the manufacturing debtor book, asset finance against owned plant, and specialist working capital. The right route depends on what security exists and how the HMRC situation is structured (active TTP vs uncovered arrears vs enforcement-stage). Active engagement with HMRC strengthens every lender application.
Route 1: Invoice finance against manufacturing receivables
If you sell B2B to named main customers (tier-1 OEMs, contract customers, distributors) with consistent payment cycles, invoice finance is usually the cleanest route. The receivables are the security so the underwriting focus is debtor quality rather than the HMRC status.
- Bibby Financial Services, part of the family-owned Bibby Line Group
- Close Brothers Invoice Finance, part of the Close Brothers banking group, alongside Close Brothers Asset Finance
- IGF Invoice Finance, independent invoice finance provider
- Ultimate Finance, independent invoice and asset finance provider
See Close Brothers for manufacturing on our sister site for the detailed comparison.
Route 2: Asset finance against owned plant
Sale-and-leaseback against owned manufacturing plant (CNC, presses, fabrication kit, commercial vehicles) releases part of its current market value as cash, depending on the asset's age, condition and resale market. The asset is the main security, so HMRC arrears aren't always a decline.
- Aldermore, established challenger bank, regulated by the FCA and PRA
- Close Brothers Asset Finance, sister to Close Brothers Invoice Finance
- Time Finance, UK challenger specialist on plant and vehicles
Route 3: Specialist working capital
If invoice finance and asset routes don't fit, specialist post-decline working-capital lenders may consider HMRC arrears at higher pricing.
- Bizcap, specialist lender that says it considers businesses with bad credit
- JPM Capital, specialist lender that may consider some declined files
Active TTP strengthens every application
Before approaching any lender, agree a Time to Pay arrangement with HMRC if you haven't already. TTP demonstrates engagement, creates a predictable repayment schedule, and is likely to help your application. Most lenders prefer to see active TTP rather than uncovered arrears; some specifically require it.
See all HMRC scenarios for a guide to each situation (VAT, PAYE, Corporation Tax, CIS), and our PAYE arrears funding page if PAYE is the specific issue.
FAQs
Will lenders fund my manufacturing business if I have HMRC arrears?
Some specialist UK lenders may; mainstream banks often won't. Lenders usually find out about HMRC arrears from bank statements, management accounts or by asking, and many banks decline at that point. Specialist working-capital lenders, asset-finance routes against owned plant, and invoice finance against the debtor book all engage with HMRC arrears on a case-by-case basis. Pricing reflects the risk, but options do exist.
Which UK lenders engage with manufacturing-HMRC-arrears files?
Three live routes. (1) Invoice finance against the manufacturing debtor book, from providers such as Bibby Financial Services, Close Brothers, IGF or Ultimate Finance, where the receivables are the security so HMRC status is one underwriting factor among many.
(2) Asset finance against owned plant, CNC, vehicles: Close Brothers Asset Finance, Aldermore, Time Finance; the asset is primary security. (3) Specialist working capital: Bizcap and JPM Capital for cases where invoice finance and asset routes don't fit.
Should I agree a Time to Pay with HMRC first?
Generally yes. HMRC Time to Pay (TTP) is a payment plan that lets you pay overdue tax in instalments. GOV.UK says there's no set time limit: the length depends on how much you owe and what HMRC agrees you can afford, and for company tax debts HMRC will ask how you will pay as quickly as possible.
Most lenders prefer to see an active TTP rather than uncovered arrears: TTP demonstrates engagement with HMRC and creates a predictable repayment schedule. Some lenders specifically require TTP-in-place before advancing.
Will HMRC engage with me if I am simultaneously borrowing?
Borrowing to clear arrears is a matter between you and the lender; HMRC's aim is to be paid. Keep HMRC informed, and make sure new borrowing doesn't leave the company unable to pay its debts, which raises insolvency risks for directors. Some lenders pay HMRC direct on drawdown to remove any ambiguity, particularly on R&D advance and VAT loan products specifically designed for HMRC clearance.
What if HMRC has issued a winding-up petition?
Far fewer options. Once a winding-up petition has been presented and advertised in The Gazette (the rules require this at least seven business days after the petition is served and at least seven business days before the hearing), very few lenders will engage, and banks commonly freeze the company's account.
Speed is critical: the time to act is before a petition is presented, by agreeing a payment plan or paying. Once a petition has been presented, talk to a licensed insolvency practitioner before any further borrowing.
Does asset finance against my CNC machinery clear HMRC pressure?
Often, yes. Sometimes. Sale-and-leaseback against owned manufacturing plant (CNC, presses, vehicles) releases part of its current market value as cash, which can be used to clear HMRC arrears; how much depends on the asset's age, condition and resale market. The asset stays in use throughout. Asset finance providers such as Aldermore, Close Brothers Asset Finance and Time Finance offer refinance; because the asset is the main security, HMRC arrears aren't always a decline.
What if my arrears are PAYE specifically?
PAYE and NIC arrears are particularly material because HMRC treats them as held-on-trust money (employee tax not yet paid over). HMRC treats unpaid PAYE seriously, and director personal liability is possible in some cases. Some specialist lenders fund PAYE arrears; see our /hmrc/paye-arrears-funding/ guide for detail.
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