Overview

This bill aims to improve payment practices for small businesses in the UK by amending existing legislation and strengthening the role of the Small Business Commissioner. Key changes include reducing the statutory payment timeframe for invoices, establishing time limits for resolving payment disputes, increasing penalties for late payments, and prohibiting certain unfair payment practices.

Description

Amendments to the Late Payment of Commercial Debts (Interest) Act 1998:

The bill shortens the payment period for invoices from 60 to 30 days, introduces a 21-day verification period for resolving payment disputes, and mandates a 30-day resolution period. If unresolved, the dispute can be referred to the Small Business Commissioner. It also increases the statutory interest rate for late payments and strengthens the definition of a "substantial remedy" for suppliers.

Amendments to the Enterprise Act 2016:

The bill expands the Small Business Commissioner's remit to include public contracting authorities, empowers the Commissioner to issue penalty notices for persistent late payments (up to £10 million for businesses, £1 million for public authorities), and mandates the publication of ranked payment performance data for large businesses and public authorities. It also prohibits certain practices such as charging suppliers for submitting invoices or maintaining supplier status.

Amendments to Other Enactments:

The bill amends the Companies Act 2006 to require auditors to report on a company's payment performance and to report instances of non-compliance to the Small Business Commissioner. It also amends secondary legislation, including the Public Contracts Regulations 2015 and the Reporting on Payment Practices and Performance Regulations 2017.

Project Bank Accounts for Public Sector Construction:

The bill requires project bank accounts for public sector construction projects exceeding £500,000 to ensure timely payments to contractors and subcontractors.

Government Spending

The bill is unlikely to significantly increase government spending in the short term. Any costs associated with the expanded role of the Small Business Commissioner and the enforcement of new regulations will be offset by potential reductions in late payment disputes and improved efficiency.

Groups Affected

• Small Businesses: Potentially benefit from faster payments, stronger protections against late payments, and access to the Small Business Commissioner for dispute resolution.
• Large Businesses and Public Authorities: Face stricter regulations regarding payment practices, increased penalties for late payments, and a greater level of transparency through publication of payment performance data.
• Auditors: Assume expanded responsibilities for reporting on companies' payment performance and reporting non-compliance to the Small Business Commissioner.
• Contractors and Subcontractors (in Public Sector Construction): Will be affected by the requirement for project bank accounts for projects over £500,000.
• The Small Business Commissioner: Will have an expanded remit and increased powers.

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