For brokers

Handling Client Objections on VAT Funding

PropertyVAT Team · Updated 21 October 2026 · 3 min read

Most objections to VAT funding are reasonable. Handled honestly, they usually resolve. Handled with a sales script, they harden.

"The rate is huge"

The instinct is to annualise. Multiply 0.03% per day by 365 and you get roughly 11%, which sounds punishing.

The honest answer: that arithmetic is correct and irrelevant, because the loan does not last a year. The number that matters is the total cost over the actual term.

On £300,000 at 0.03% per day:

• 30 days — roughly £2,700
• 60 days — roughly £5,400

Then it is repaid by HMRC and gone. Give the figure in pounds and the objection usually evaporates on its own.

"I'll just fund it myself"

Often the right answer, and worth saying so when it is.

The honest answer: ask what else that money would do over the next two to three months.

• Nothing in particular — self-fund. It is genuinely cheaper, and telling them so builds more credibility than any pitch.
• It is the deposit on the next acquisition — then the facility costs £5,400 and preserves a deal worth considerably more.
• It is working capital — taking it out of a trading business for a quarter, right after taking on a mortgage, is usually the worst available option.

The question is not whether they can fund it. It is what the money would otherwise be doing.

"My bank will add it to the loan"

Sometimes true, often not.

The honest answer: many senior lenders will not advance against VAT, because it is a recoverable tax rather than value in the asset. Those that will usually do it by increasing the advance against the property, which raises LTV and takes a full credit process with a valuation.

There is also a structural mismatch: the VAT comes back in weeks, but the senior debt runs for years. When the refund lands, the client either carries surplus debt or pays an early repayment charge.

Encourage them to ask their bank. Have the alternative ready for when the answer is no, or takes three weeks.

"We're doing a TOGC, so there's no VAT"

Probably right, and that is worth confirming rather than contradicting.

The honest answer: TOGCs mostly work. They also fail late, usually because the buyer's option to tax was not notified in time, or a tenant vacated before completion. If it fails, 20% appears with days to go.

Frame the facility as a standby rather than a prediction. "If the TOGC works, we cancel it and you have paid nothing. If it doesn't, you complete." Most clients accept that framing, because it does not require them to believe their deal will fail.

"I'll get the VAT back in a month anyway"

Sometimes. Often not.

The honest answer: it depends on when you complete relative to your VAT quarter end, and whether HMRC verifies the claim.

Complete two weeks before quarter end and six weeks is realistic. Complete two weeks after and it can be close to four months. A newly formed SPV filing a large first claim is also the profile most likely to be checked before payment.

Ask when their VAT quarter ends. The answer often changes the conversation, and it is a question almost nobody else has asked them.

When to stop selling

If the client has idle cash, a completion date comfortably before their quarter end, an established entity with a clean filing history, and no competing use for the money — they do not need a facility.

Say so. You will get the senior deal, the referral, and the next case. A broker who recommends a facility the client did not need is remembered for exactly that.

This guide is general information, not financial advice. Clients should take their own advice on funding structures.