Businesses are entitled to a compensation* payment and interest (currently at 8% above Bank of England base rate) for each business debt not paid on “the day after the relevant date”, this statutory entitlement is independent of the subsequent payment of the principle amount of the debt.

Additional compensation is recoverable** to indemnify a “supplier” for the expense of appointing bookkeepers, accountants and lawyers to assist with the calculation and recovery of the late payment compensation.

The fixed sums for compensation are:

For invoices up to the value of £1,000 – £40

For invoices over £1,000 and less than £10,000 – £70

For invoices of £10,000 or more – £100

The invoice does not need to be unpaid to make a claim; it only needs to have been paid late. The ‘supplier’ has 6 years from the relevant date to issue a claim at Court.

If you consider your business debts may have been paid late, please contact us and allow us to complete a free audit of your last 6 years invoices.

Call: 0161 477 9451 enquiries@psl4law.com


Notable Cases:

Evolution Costs Ltd v Armstrongs Solicitors

The Defendant failed to pay invoices for law cost drafting services, on time (in respect of some invoices, and at all in respect of other invoices). Separate proceedings were issued (1) for debt and (2) for statutory compensation and interest under the Late Payment of Commercial Debts (Interest) Act 1998 for those invoices issued during the previous 6 years which had been paid late or not at all – including some of the invoices in the debt action.

The Defendant pleaded that the issuing of 2 sets of proceedings was an abuse of Court process and/or there was an implied term on late payment that the statutory entitlement to compensation was waived by the receiving party. In a reserved written Judgment the Court found in favour of the Claimant on both points.



Dr G v A Firm of Solicitors

The Claimant (a CPR/35 Court Expert) issued proceedings to recover from the Defendant solicitors his expert’s fees, and statutory compensation and interest under the Late Payment of Commercial Debts (Interest) Act 1998.

The matter settled in advance of Trial under the terms of a Tomlin Order.

* The Late Payments of Commercial Debts (Interest) Act 1998 S.5a & 4 – respectively, and as to interest rate see The Late Payment of Commercial Debts (Rate of Interest) (No. 3) Order 2002

**The Late Payment of Commercial Debts Regulations 2013, confirms that the reasonable costs of making a successful claim under the Act are recoverable from the paying party.