I have bills that were paid late, but that was years ago. Is the interest that was due on them still payable?
Yes it is, as long as the invoice is less than 6 years old.
I don't have a written contract with my customers. How do I work out whether or not Late Payment Interest is due, and how much it is?
Contracts do not have to be in writing to be enforceable. Suppliers can rely on a consistent course of dealing, or prevailing market practice, to establish the terms of their agreement. These terms are every bit as valid as those made in a written contract.
I have a written contract, but it makes no provision for Late Payment Interest. Can I still make a claim?
Yes, the relevant provisions are determined by applicable law.
The T's&C's give the customer 90 days to pay, which the customer normally does. Can I still make a claim?
Yes you can. Any provision which provides for a longer period than 60 days (or 30 days when dealing with a Government agency) in which to pay invoices is liable to be set aside.
I tend to have a single contract or arrangement with a customer under which multiple invoices are issued. How is this treated?
There is no problem with this. The rules focus on invoices rather than contracts, so there is no problem in compiling a claim where the sums claimed were paid under large numbers of invoices issued under a single contract.
We need information from you to help simplify the process of establishing that invoices were properly issued and actually paid. Where information is incomplete this can still be done, but the process is more difficult. We will work with you to do the best we can to reach the necessary standard of proof. Where you are using a computerised accounts system, we would normally expect to be able to extract sufficient information, and again we would do this completely free of charge.
I still have a working relationship with a customer who owes me a significant amount of Late Payment Interest. What should I do?
It is a statement of the obvious to say that there are significant sensitivities about approaching existing customers about late payment interest. It is equally true however that the existence of a culture of late payment is a material issue for almost all suppliers, and something that needs to be addressed. This process can be as much about looking forward as looking back; a discussion about late payment interest can be an invaluable springboard for establishing a new way of doing business going forward.
Will I have to pay income or corporation tax on the LPI I recover?
Late payment interest is income in exactly the same way as any other receivable that your business has.