November 29, 2020

Volume X, Number 334


Reporting on Payment Practices and Performance in United Kingdom

The UK government has published the Reporting on Payment Practices and Performance Regulations 2017. The regulations come into force on 6 April 2017 and, subject to certain exceptions, the duty to report will apply in relation to financial years beginning on or after 6 April 2017.

The regulations only apply to “qualifying” companies incorporated within the UK. Whether a company is a qualifying company depends on whether it is a parent company or not.

As regards a non-parent company, if it exceeds any two (or all three) of the thresholds set out below, it will be a qualifying company. As regards a parent company, it faces a two stage test before it is considered a qualifying company:

  • first, the parent company must, as an individual company, exceed any two (or all three) of the thresholds below; and

  • secondly, the group of which the parent company is the head must exceed any two (or all three) of the specified thresholds.

The balance sheet thresholds are:

  • Annual turnover: £36 million net (£43.2 million gross).

  • Balance sheet total: £18 million (£21.6 million gross).

  • Average number of employees: 250.

The Regulations require qualifying companies to report on relevant contracts, broadly:

  • contracts for goods, services, or intangible assets (including intellectual property) entered into in connection with the carrying on of a business;

  • are not a contract for financial services; and

  • have a significant connection with the UK, such as contracts to be performed in the UK or where one or both of the  parties is either established in the UK or carries on a relevant part of their business in the UK.

The report must be published on a web-based service to be provided by the government (available from April 2017) and suppliers, and other interested parties, will be able to view the information as soon as it has been published.

Qualifying companies will need to report on their standard payment terms, including:

  • the period in which the company is contractually required to pay a sum, expressed in days;

  • details of any variations to the standard payment terms made by the company in the reporting period;

  • details of any notification or consultation by the company with suppliers prior to the variation;

  • a description of the maximum payment period specified in a qualifying contract;

  • an explanation of the company’s process for resolving a payment-related dispute with a supplier;

  • various details about the company’s payment practices and policies;

  • a statement of the average number of days taken to pay suppliers; and

  • a statement as to whether the company has deducted a charge levied on a supplier for remaining on the company’s list of suppliers or potential suppliers.

 Breach of the reporting requirements is a criminal offence.

© Copyright 2020 Squire Patton Boggs (US) LLPNational Law Review, Volume VII, Number 81



About this Author

Hannah Kendrick Corporate Attorney Squire Patton Boggs Leeds, UK

Hannah leads our Corporate Practice in Leeds and has a wide range of experience advising both public and private companies on mergers and acquisitions, fundraisings, takeovers, restructurings and reorganisations.

Her work varies between UK and cross border and she works closely with executives, in-house legal teams and general counsel both in the UK and globally.

Hannah is a member of the Regional Advisory Group of the London Stock Exchange plc for the North East.

44 113-284-7620