Late payment charges

Unless you’ve got a contractual agreement that says something else you can charge the amounts set in the late payment legislation. For invoices up to £999.99 you can charge £40 PER LATE INVOICE. For invoices of between £1,000.00 and£9,999.99 you can charge £70 PER INVOICE. You can also charge interest on a daily basis, currently at a rate of 12.5% per annum.
You don’t charge VAT on the late payment or the interest and you don’t charge the late payment fee on a recurring basis.

You don’t HAVE to charge the late payment fee but unless you’ve specifically agreed to waive the fee the late payer still owes it to you EVEN AFTER THEY’VE PAID THE ORIGINAL DEBT. The late payment fee is like any other debt – you have up to 6 years to recover it from the late payer.

Posted under Late Payment

Posted by Alec at 12:13 pm, November 9, 2006

2 Comments so far

  1. Alec added on  November 9th, 2006 at 15:31

    Not at all Colin. These are statutory charges – in fact you’re not even allowed to contract out of your right to charge them.

  2. The interest’s just on the original debt, it’s calculated on a daily basis at 1/365 of the annual rate. The rate isn’t actually 8% over base rate – it’s set twice a year depending on the base rate on 31st December and 30th June – so it’s 12.5% until at least 1st January 2007.
    There’s an interest calculator available HERE

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