BIS has published new proposals to tackle late payment issues and their impact on SMEs' liquidity and survival. The Late Payment Directive (2011/7/EU) allows representative bodies to challenge late payment terms and practices that are "grossly unfair" and although the Late Payment of Commercial Debts (Interest) Act 1998 has already been amended to implement the directive BIS is now seeking views on what constitutes 'grossly unfair' in relation to payment terms. The proposals, which are targeted at SMEs, are intended to give business group representatives further powers to challenge unfair payment terms and practices on behalf of their members, such as:

  • Confirming whether representative bodies can challenge grossly unfair payment terms on behalf of individual businesses, groups of individual businesses, or both.
  • Keeping a defined list of officially recognised representative bodies that are able to bring claims in court on behalf of their members.
  • Refining the definition of grossly unfair by having a list of indicative criteria to assist in the interpretation of the term.

The consultation closes on 9 March 2015. The government intends to draft regulations based on the responses and will consult on these in the summer.  It is not clear how or if any future legislation with impact on the existing payment provisions in the Housing Grants, Construction and Regeneration Act 1996 as amended by the Local Democracy, Economic Development and Construction Act 2009.