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Under the Late Payment of Commercial Debts (Interest) Act 1998, a business that pays another business late owes simple interest at 8% above the Bank of England reference rate, plus fixed compensation of £40, £70 or £100 per invoice depending on its size. It does not apply to consumers.

No. Statutory interest and compensation are outside the scope of VAT. Record any interest you receive on a separate line with no VAT. Ask your accountant to confirm for your circumstances.

When the debtor is an individual, including a sole trader, the Pre-Action Protocol for Debt Claims applies. The letter of claim must be posted with an Information Sheet, Reply Form and Financial Statement, and you must wait 30 days before going to court.

You choose who is chased. Protect any customer, approve every message before it goes, and offer to waive interest if they pay promptly. Messages go out in your name, not ours.

You do, at gov.uk/make-money-claim. We prepare your answers and the evidence; we never act for you in court.

Read-only. We can see invoices, payments and contacts. We can never change anything in your accounts.