Articles

The Late Payment of Commercial Debts (Interest) Act 1998 was introduced on 1st November 1998 and came into force fully on 7th August 2002. Its aim was to encourage debtors to pay their invoices as soon as they became due for payment or take the risk of being sued and having to pay large amounts of interest and compensation.

The Act only governs commercial debts for the supply of goods or services provided. Creditors are entitled to claim interest at a rate of 8% above the Bank of England Official Bank Rate from the date the invoice(s) became due for payment.

In addition to interest, compensation can also be claimed ranging from £40.00 to £100.00 per invoice depending on the value of each invoice. These sums are claimed from the beginning of our involvement in our letter before action and, if Court proceedings are subsequently issued, this rate of interest is also applied in place of the Court’s standard rate of interest of 8%.

In a recent case for late payment of invoices totalling just over £12,000.00 we successfully recovered compensation of £2,570.00 and interest of £875.00. After payment our legal costs our clients were left with a substantial sum of money to compensate them for loss of profit and inconvenience caused by late payment of the invoices.

June Watson