Does a client with poor credit get declined?

Less often than on standard bridging. The exit is an HMRC refund rather than a sale, so credit weighs less. Serious adverse history affecting the entity or directors is still assessed.

Is a brand new SPV with no accounts a problem?

No. It is the normal profile for commercial purchases and lenders expect it. What matters is that it is VAT registered and the reclaim is well evidenced.

What is the most common outright decline?

The buying entity is not VAT registered and cannot be in time. Without registration there is generally no reclaim, which means no exit, and no amount of security fixes that.

Can a declined case be revived?

Often, if the problem is evidential rather than structural. A missing option to tax acknowledgement or an unclear intended use can usually be resolved. A missed registration usually cannot.

For brokers

VAT Cases That Get Declined

PropertyVAT Team · Updated 21 October 2026 · 3 min read

Because the exit on a VAT facility is an HMRC refund rather than a property sale, the decline reasons are different from standard bridging. Knowing them saves you packaging cases that were never going to fund.

The structural declines

These are the ones where the answer is no, and more information will not change it.

No VAT registration, and no time to get one

Recovery normally depends on the buying entity being registered at the time of the purchase. No registration means no reclaim, which means no exit.

Registration takes weeks. If completion is in ten days and nothing has been started, this is usually terminal — not because the lender is unwilling, but because there is nothing to lend against.

The tell: "we're just getting the VAT registration sorted."

The VAT is not recoverable

If the property will be used for exempt purposes, recovery may be restricted or blocked. A fully exempt occupier — some healthcare, insurance, financial services — may have no recovery at all.

There is no reclaim to lend against, and the client's problem is a permanent cost rather than a timing one.

The tell: the client's business is in an exempt sector, or the plan is residential letting.

The VAT position cannot be evidenced

Nobody can produce the contract term, the option to tax, or any document establishing that VAT is properly payable. An underwriter cannot fund an amount that has not been established.

The tell: the only source for the VAT position is the agent's particulars.

The reclaim belongs to someone else

The entity completing is not the entity registered for VAT. This happens with group structures, late changes of buying vehicle, and nominee arrangements. The lender is lending to one party against another party's refund.

The tell: the SPV name on the contract does not match the VAT certificate.

The ones that look worse than they are

These get declined by brokers before they reach a lender, which is a waste.

Profile	Why it is usually fine
Brand new SPV, no accounts	The normal profile for commercial purchases
No property portfolio	The reclaim is the exit, not the portfolio
Client has some adverse credit	Weighs less when the exit is an HMRC refund
Large VAT relative to the deal	Expected — it is 20% of the price by definition
Completion in 72 hours	Fine if registration is in place
Auction purchase	One of the most common uses

If the registration is sound and the VAT position is evidenced, most of these fund.

The grey area: TOGC uncertainty

Cases where TOGC treatment is intended but unresolved sit awkwardly. There may be no VAT to fund at all — or 20% appearing days before completion.

Lenders are generally comfortable with this if it is disclosed early and structured as a contingency. They are not comfortable discovering it late.

Handle it by: flagging the TOGC question in the first submission, setting the facility up as a standby, and confirming the position as soon as it is known.

A ninety-second pre-qualification

Before you package anything:

Is the buying entity VAT registered today? No, and no time — stop.
Can you evidence that VAT is payable? No — get the contract first.
Will the property be used for taxable purposes? No — recovery may be restricted; flag it.
Does the entity completing match the entity registered? No — resolve it.
Is a TOGC in play? Yes — disclose it up front.

Three noes on question one, two and four and the case will not fund. Clear answers on all five and it almost certainly will.

Reviving a declined case

Ask which kind of decline it was:

Evidential — a missing document, an unclear intended use, a mismatched name. Usually fixable within days.
Structural — no registration, no recoverability. Usually not fixable on this transaction.

Lenders will tell you which, if you ask. It is worth asking, because the second answer changes the conversation you need to have with your client about whether they can complete at all.

This guide is general information, not financial advice. Criteria vary by lender — discuss specific cases directly.

Frequently asked questions

Does a client with poor credit get declined?: Less often than on standard bridging. The exit is an HMRC refund rather than a sale, so credit weighs less. Serious adverse history affecting the entity or directors is still assessed.
Is a brand new SPV with no accounts a problem?: No. It is the normal profile for commercial purchases and lenders expect it. What matters is that it is VAT registered and the reclaim is well evidenced.
What is the most common outright decline?: The buying entity is not VAT registered and cannot be in time. Without registration there is generally no reclaim, which means no exit, and no amount of security fixes that.
Can a declined case be revived?: Often, if the problem is evidential rather than structural. A missing option to tax acknowledgement or an unclear intended use can usually be resolved. A missed registration usually cannot.

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