If you have debts owing from either a business or an individual, it is worth noting that there are various ways in which you may be able to charge interest.
If your terms and conditions allow for reasonable interest to accrue on outstanding amounts, you can, of course, rely upon your terms and conditions providing such terms and conditions are reasonable. If, however, you do not have a specified interest rate in your own terms and conditions, you may still be entitled to seek statutory interest, as per prescribed rights using certain Legislation.
S.1 Late Payment of Commercial Debts (Interest) Act 1998
You may have the right to apply statutory interest to the debt at a rate of 8% above the Bank of England base rate. The base rate is currently 0.75%. The Bank of England base rate is the official minimum interest rate that a bank may deal in when offering their products. This interest may be applied in circumstances where the debt resulted from the sale of goods and/or provision of service. You cannot apply this interest where the contract is one for consumer credit, or a contract to provide a mortgage, pledge, charge or other security.
Also under S5A of the same legislation, you may be able to charge a fixed fee of £40.00 where the debt is less than £1,000, £70 for a debt between £1,000 and £10,000, and £100 for a debt of £10,000 or more.
S.69 County Court Act 1984
Where judgment (handed down in the County Court) has been awarded for the debt amount, you may have the right to charge statutory interest at a rate of 8%. You cannot apply this interest where other interest is running on the debt.
S.35A Senior Courts Act 1981
If the judgement is handed down in the High Court, you may seek to claim interest at a rate of 8%. You cannot apply this interest where other interest is running on the debt.
If you would like any further information on any of our debt recovery services, please contact Jordan Griffiths ACILEx- Paralegal on 01747 825432 or firstname.lastname@example.org.
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This is not legal advice; it is intended to provide information of general interest about current legal issues and references to legislation are current as at the time of publication.