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The Reporting on Payment Practices and Performance Regulation 2017

May 2017 - Issue 93

Every year, many businesses will experience severe administrative and financial burdens, simply because they are not paid on time. Late payment is a key issue for business, especially smaller businesses as it can adversely affect their cash flow, jeopardising their ability to trade and even lead to insolvency. 

The Reporting on Payment Practices and Performance Regulations 2017 and the Limited Liability Partnerships (Reporting on Payment Practices and Performance) Regulations 2017, which came into force on 6 April 2017 introduces a duty on the UK’s largest companies and LLPs to report on a half yearly basis on their payment practices, policies and performance for financial years beginning on or after 6 April 2017. This information will be published through an online government service and will be available to the public.

This will allow organisations with good payment records to highlight and celebrate their payment performance, whilst raising public awareness and scrutiny of poorer payers. As suppliers and other interested parties will be able to view the information as soon as it is published, this has the potential to lead to a fundamental shift in the payment performance of the UK’s large organisations.

Who is subject to the reporting duty?

The reporting requirements in the RPPP Regulations 2017 apply to a company formed and registered under the CA 2006 or a previous Companies Act in relation to every financial year beginning on or after 6 April 2017 in which it is a qualifying company. A company in its first financial year is not a qualifying company.

A company which, based on its last balance sheet date before the financial year, exceeds two of the three thresholds below, is a qualifying company.

The current figures for the general thresholds under section 465(3) of the CA 2006 are:

Companies incorporated outside the UK are excluded from the reporting requirements.

What must be reported?

Businesses which meet the threshold are required to report on payment practices and performance for contracts entered into on a business to business basis for goods, services or intangible assets, including intellectual property (with an exception for contracts for financial services).

Information including narrative descriptions of standard payment terms, statistics concerning the late payment of invoices, and statements about the business’s process for resolving payment must also be included in the report.

Anna Mulholland

Trainee Solicitor

e amulholland@prettys.co.uk

t 01473 298218

 

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