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UK businesses are requesting funding in order to meet the 31 January tax payment deadline as other costs threaten to disrupt their cash flow this month.

Finance provider Syscap says it currently has £31 million worth of outstanding requests for funding as of 5 January, compared to £22 million this time last year.

The number of requests for loans received by Syscap is up 41 per cent on the previous year.

In addition to their tax bills, many businesses had to make a quarterly rental payment by 25 December, says Philip White, chief executive of Syscap.

The increase in VAT to 20 per cent will also place pressures on cash flow. White warns that businesses may have to wait months for their clients to pay invoices.

At the same time, it has been suggested that the HMRC is making access to its ‘Time to Pay’ scheme more difficult, which White believes is a ‘vital lifeline’ for ‘cash-strapped’ businesses.

Under the scheme, businesses can apply to defer PAYE, National Insurance and VAT for up to six months.

White predicts that there will be a number of businesses applying for the scheme before the tax deadline this month as businesses look for alternative sources of funding.

He adds, ‘Although HMRC currently will not force a business to sell its “essential assets” to pay a tax debt it may expect them to sell more liquid assets. A poorly timed sale of assets could cost a business dearly.’