This Is An Essential Guide Explaining Interest and Charges Entitlement

INTEREST & COMPENSATION CHARGES

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When a payment becomes late, what extra charges can I make?

On any instruction to LPL you are entitled to add interest and charges (Penalty Charges) under the following conditions: You have incorporated within your own Terms and Conditions (Contract) your own PENALTY CLAUSE which states that you are entitled to add interest and/or charges to any debt that is overdue, or charge the debtor such charges as incurred by your third party Collection Agent. IF YOU DO NOT HAVE SUCH CLAUSES YOU CAN STILL ADD INTEREST AND CHARGES.

As a Statutory right on commercial debt in accordance with The Late Payment of Commercial Debts (Interest) Act 1998 and amended Regulations 2002 & 2013.


Both Interest & Compensation Charges can be added per invoice (if invoices represent separate orders).

INTEREST

You can add to each overdue invoice: The Bank of England base rate as fixed 1st January, it is then kept at that rate for the next 6 months regardless of changes. If the base rate has changed from 1st July, the new rate is then fixed until 31st December, ie: The base rate at publication was 0.5% so as of September it still remains 0.5% for the purposes of calculating the interest. You then add 8%. Total 8.5%. After the first 30 days from date of invoice you can make the following calculation – (once calculated you cannot change the rate or reset the interest. VAT is not applicable). DEBT multiplied by INTEREST RATE divided by 365 multiplied by THE NUMBER OF DAYS LATE

COMPENSATION CHARGES

Up to £999.99 add £40.00 (VAT is not applicable)
£1,000 to £9,999.99 add £70.00 (VAT is not applicable)
£10,000 or more add £100.00 (VAT is not applicable)

As of 13th March 2013 If invoices are raised after that date reasonable debt collection charges instead of compensation can be added to the debt as a statutory liability of the debtor together with interest.

The Law states that any debtor must have fair notice of any penalty charge being made. Any notifications by LPL on your behalf is considered fair notice.

Interest stops running on a debt once the principle has been paid and any part payment can go to reduce the amount of interest and charges first. Once LPL is instructed to facilitate collection the interest stops running from that date



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