Amendment to Section 2A Clause 23.3 Interest

DCUSA Section 2A Clause 23.3 refers to ‘reasonable administration charges’ but does not provide an explanation of how to calculate the charges and as a result is open to interpretation. The ‘reasonable administration charges’ do not appear to be aligned with the Late payment Act which has specific compensation charges of £40, £70, and £100 depending on the amount of the late paid invoice.

DNOs seem to use the compensation amounts from the Late Payment Act but they are labelling the charges ‘Administration charges’ rather than Compensation charges. Administration charges are VAT applicable whereas compensation charges are VAT exempt. This issue suggests that the ‘reasonable administration charge’ – should be removed and a reference to the Late Payment of Commercial Debts (Interest) Act should be included at Clause 23.3. This will align the DCUSA with the Late Payment Act.

At the 29 May 2015 meeting, the DCUSA SIG advised that it is described as reasonable administration charge in DCUSA so it is VAT is applicable. The Late Payments of Commercial Debts Act is only applicable if there is not a remedy, where Parties agree a remedy the statute does not apply. The proposer agreed to withdraw this issue based on the advice provided above.