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Late payment rates depend on timing

LETTERS

Sir, I read with interest the article entitled 'Payment scams revealed' by Rudi Klein (Construction News, September 2).

The article included reference to The Late Payment of Commercial Debts (Interest) Act 1998, stating that it provides the payer with an entitlement to 5 per cent above the base rates as interest for late payment.This is incorrect.

nFor contracts dated prior to August 7, 2002, the late payment interest rate is 8 per cent plus the Bank of England base rate that was in place on the day the debt became overdue.

nFor contracts dated on or after August 7, 2002, the late payment interest rate is 8 per cent plus the reference in force on the contract date.

The current reference rate for the period July 1, 2004, until December 31, 2004, is 4.5 per cent.

The Better Payment Practice Group's website, www. payontime. co. uk, contains full details of the late payment legislation along with a statutory interest calculator, which instantly works out the interest due on a particular debt.

The site also includes information and advice on credit management and offers example letters for all the stages of chasing payment right from the setting-up of the account through to any necessary legal action.

Jenette Perry Better Payment Practice Group Secretariat London