With effect from April 2017, there will be a mandatory duty on the UK’s largest companies and LLPs to report on a half-yearly basis from (depending on financial year dates) October 2017 on their payment practices, policies, including the average time taken to pay supplier invoices.
As part of a modern industrial strategy to improve economic growth and increase productivity across the country, the Government has recognised the acute need to change a UK business culture where it is deemed acceptable to pay small firms late.
The changes are designed to shine a transparency spotlight on bad payment practice and lead to improved standards. Currently, nearly half of the UK’s small-to-medium sized businesses experience severe administrative and financial burdens due to late payment, with a massive £26.3bn owed to them in total. It is estimated that if payments were made promptly, 50,000 business deaths could be avoided every year, adding £2.5bn to the UK economy.
By making this an issue, tackling it head-on and increasing transparency with a new digital service for publishing and searching for reports, the Government’s hope is that small businesses will be able to make informed decisions about who they do business with and that that there will be a positive impact on their ability to invest and innovate.
Failure to publish a report, containing the necessary information, within the specified filing period is a criminal offence by the business, and every director of the company, or designated member of an LLP.
For further information on the change in these regulations, please contact tom.torkar@michelmores.com.
