Claiming compensation under the Late Payment of Commercial Debts (Interest) Act 1998

Under the Late Payment of Commercial Debts (Interest) Act 1998 (“the Act”), as amended by the Late Payment of Commercial Debts Regulations 2002 businesses are entitled to charge interest on certain debts arising under commercial contracts for the supply of goods and/ or services and for connected purposes.

In addition to this entitlement to charge interest the Late Payment of Commercial Debts Regulations 2002 (“the Regulations”) amended the Act by giving businesses the right, in certain circumstances, to claim compensation arising out of late payment.

The right to compensation does not apply to contracts made on or before 6 August 2002.

Who can claim compensation under the Act?

Only businesses are able to claim compensation under the Act. “Business” includes a profession and the activities of a government department or a local or public authority.

When can compensation under the Act be claimed?

Compensation can only be claimed by a business where they have the right under the Act to claim interest for late payment of a debt and where the right to claim “statutory interest” (interest claimed in accordance with the provisions of the Act) has started to run.

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For more information on:

  • How much compensation can be claimed?
  • Can compensation be claimed in addition to interest claimed under the Act?