Reply With QuoteI think you probably know the answer already...
Any advice welcomed, I'm in construction and owed around 25k from a small one man band Ltd company. Payments have been outstanding since September & December '21, we've had verbal conversations up until about 1 1/2 month ago and he basically said he wasn't in a position to pay anything till he'd been paid off the MC, which is fair enough and one I accepted. However after recently speaking to the MC I've been informed payments have started to be released to him (albiet over a period of 2 months and weekly payments)
I've tried emailing/calling to no avail and am now starting to get a little worried. Question is do I go the legal route and if so how do I go about it and final potential nightmare, the guy has started with symptoms of some form of dementia, I do know he's started to get forgetful (albeit selective I'm thinking at this stage)
Thanks in advance
I think you probably know the answer already...
"Once is happenstance. Twice is coincidence. The third time it's enemy action."
'Populism, the last refuge of a Tory scoundrel'.
Just be wary because he’s probably told everyone he owes the same story. Is it goods or services he owes, if it’s goods can you get them back? I would also send him to his registered office a statement saying you want payment immediately. These are times when you being mr nice has to go out the window. If he’s got dementia he won’t be in the game long so you’re probably not going to loose much future business there, and maybe approach the MC and explain to him the situation as he might pay you directly for your work, it’s certainly worth a try but whatever, don’t sit back with this one.
That’s just my view although, I can be abrupt ! Others will hopefully give you a different approach.
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Three months from now - you will be wishing you had started proceedings four months previous.
His sort rely upon people holding off - thinking/hoping the payments will materialise. They seldom do.
As prev said - there is probably/certainly no work coming your way from him in the future.
Good luck
This.Originally Posted by blackal
I’ve learnt now never to delay chasing money.
I personally would go the legal route immediately, as others have already stated you will most likely regret not doing so later down the line.
Wish you all the best.
Thanks guys, it’s services based and I’ve already paid the vat on half the amount :(
As suggested think the legal route is now the only option left on the table as I’ve missed the boat on approaching the MC. Sad thing is I’ve known the guy for a number of years so bitterly disappointed as well
You should be able to reclaim the VAT. It could involve sending a letter to them, but check online for the procedure.
Or - you could under-declare income in this quarter to compensate.
A few years back my company was owed a significant amount.
I was a bit wet behind the ears then, did my best to avoid conflict etc.
I asked and asked and asked the guy to pay over the space of a year, fell on deaf ears.
Mentioned to a friend what was going on, he recommended these guys: https://www.thomashiggins.com/
I paid a couple of quid to send a letter before action (not expecting it to work). By the end of the week the invoice was paid in full with lots of apologies….
Some good advice on this thread and personally I’d be going down the legal route at 9am tomorrow morning.
Once again thanks guys, just travelling so will digest link tonight thanks
How big is the MC because all the majors payment terms have been 14 days to 30 days for the last twelve months.
The contractor paying him maybe on reverse VAT where they will pay the VAT direct and he just claims his VAT on his purchases.
I have no clue what the MC stands for, but I get that dementia guy was working for them and you did work for him.
MC's business is with him, so they're not going to pay you as he could sue them for non payment
Best choice. Is court to sue him or sue him and ask the judge to have MC pay you directly rather than pay him
Best to talk to a lawyer.
DON
I can recommend safe collections. Agree with everyone else - denial delays your chances of recovering the debt. By going legal hopefully you will get his attention over his other creditors.
Main contractor. In some jurisdictions, for example the USA, the main contractor has a responsibility in law, in the UK the main contractor doesn't beyond the contract and morally. Canada? It's a big problem in the UK, main contractors paying late or unreasonably holding funds from first tier sub-contractors and so first tier sub-contractors not paying second tier sub-contractors until cash begins to flow.
There are industry prompt payment codes that contractors sign up to, but.....
OP what does the contract between you and your customer state?
Last edited by BillyCasper; 3rd April 2022 at 15:55.
Thanks all, interesting links. I am going to try communication once more tomorrow and if that fails will get in touch with the appropriate debt agency. Will let you know how things progress
In addition to what others have said, a couple of thoughts:
(1) OP, you entitled this thread "Invoicing advice required" but I very much hope that you have already invoiced for work done/goods supplied! :-) This is a thread about collections, rather than invoicing.
(2) Assuming that the sum due is within the small-claims track (£10,000), get a copy of this book and read it: 'Small Claims Procedure in the County Court: A Practical Guide to Mediation and Litigation'. (ISBN 978-0854901425). There are many books on the subject but this is one of the best. Specifically the sections that are relevant to you right now concern the pre-action protocol. Even for small-claims County Court actions it is increasingly important to follow a proper pre-action protocol, that is to say the correct warnings and actions to take before finally resorting to legal action.
(3) If the sum due is more than £10,000, consult a solicitor or chartered legal executive (in parallel with using the debt collectors). You will need their help if/when court actions becomes a necessity.
Last edited by markrlondon; 4th April 2022 at 07:10.
Thanks, indeed invoices been submitted long time ago just chasing payments and over the 10k claim
In that case I'd definitely suggest consulting a solicitor or chartered legal executive for advice (although using a debt collector for now shouldn't prejudice anything that comes later). The totality of the pre-action protocol is still important to get right.
And good luck! Hope the money turns up sooner rather than later.
Great advice, I am ordering the book for a read, just so that I familiarise myself in advance of the inevitable one day!
Not sure how much change there will be but there is now a seventh edition of the same book
(ISBN13: 9780854903009)
Last edited by tango; 4th April 2022 at 09:03.
Thanks for that! Definitely worth getting the latest edition.
P.S. I see that this is available at a good price direct from the publisher: https://www.wildy.com/isbn/978085490...e-county-court
Last edited by markrlondon; 4th April 2022 at 09:15.
Don’t delay, head down the legal route.
If they haven’t paid by now, the chances of payment are diminishing, if he owes others the longer you delay the more chance someone else will have already put a claim in and recovered any assets.
I believe that small claims is still an option if you have multiple invoices below £10k that only breach it when combined.
You do however have to manage them as separate claims.
I assume that you are not still doing any work for him and that all invoices have been raised and sent, if the invoices are overdue and you have no promises of payment send a winding up petition, it will bring things to a head one way or another, if he is messing you about it will concentrate his mind.
Not sure exactly what the rules are but the outstanding amounts aren’t (and hopefully won’t be) bad debts and so the VAT appears to have been correctly accounted for. Definitely check before attempting to reclaim it just now.
Last edited by David_D; 4th April 2022 at 12:10.
You shouldn't pay the VAT on an invoice not yet paid, although I read that the OP had done that. The invoice amount doesn't matter - it is the remittal that VAT is payable on.
Only if the OP is operating on the VAT cash accounting system. If not in simple terms the creation of the invoice creates the tax point
Sent from my moto g(7) plus using Tapatalk
Not sure what you mean but Taxboy's point about the VAT cash accounting system is a good point.
I'm sure he is right, given his monker.
With my VAT - I pay vat on invoices when they become remittals to my account (cash VAT accounting). Certainly would not want to pay VAT on an unpaid invoice.
One client I had last year - informed me that the company that had contracted them - were not entertaining VAT-inc invoices as they believed that their business area (offshore) precluded that.
Not sure what he expected me to do, but I told him that I would be adding VAT as normal, and if he chose not to pay the VAT, that was up to him - as I only paid VAT on what I received, and my records would stand up.
I'd have a hell of a VAT bill if I had paid it on my invoice.
(I know - that is by the by)
An early consideration in this process, before any recovery process begins, do you feel has the money/owned assets to make forced recovery viable.
Ah, right. Yes, looks like cash accounting compared to the more conventional.
I was owed just over 30k by a client. I started proceedings via money claim online. Cost about £500 due to the amount. They settled before it got to court. Seriously, start the process now. It takes about 30 minutes.
Thanks all for great advice, I’ve tried speaking to my accountant this evening just to give him a heads up on the direction I’m going to take, will set the ball rolling tomorrow with a call to a small claims firm
With the particular work I’ve done it didn’t qualify for reverse charge vat scheme and I only paid the vat as instructed by my accountant, I/he thought I was going to be getting paid in the near future hence the vat payment made
Good advice about being quick as I’ve heard that another couple of guys are in the same boat as me so would hate ending up being sloppy 3rd’s on the list
OK. Get.
I helped a friend of my occasionally making signs for a company that rented them to large construction companies. Companies got paid by the government, then paid the supplier, then paid my friend who gave them 30 days.
Lot of waiting if A doesn't paid on time to pay B who has to pay C and so on.
DON
Just an update, made contact with one of the companies recommended on here so the ball has started to roll and starting to supply them with the relevant information required
Thanks to all
Had some feedback from one company after supplying them with relative invoices owed and was quoted as below
As such we can take a run at recovery here with no advance fees and no hidden or abortive charges and we will charge a flat 15% +VAT of any recovered amount
Just waiting a reply from another firm, does this sound the norm for these sort of charges
No direct experience of your situation, or helpful advice, but I hope you get your money.
I work for a large corporate, with robust and inflexible financial systems, and have to place orders with small contractors. 30-60 day payment terms are fine for large entities, but they are a bitch for small companies.
How far will they go for that fee and what exactly will they do for it?
The implication from that one line is that they are merely going to attempt collection by writing letters/phoning/visiting the debtor. If that doesn't work, what next?
Does their 15%+VAT fee include court action (that would be needed if the debtor could not be persuaded to pay up) and the associated costs? I doubt it but you could ask.
Is it worth 15%+VAT to you to hire them to in fact do what you can do (write letters), which may or may not be successful. They have no special powers, only experience.
On the other hand, if they don't succeed them it will have cost you nothing. And I presume that they have a legal department that can carry out the next step: Legal action (presumably for additional cost).
Yes - quite possible that they base their business model on (say 30%) of cases that require minimal work for 15% revenue. The other 70% when not fruitful from their minimal approach - is little loss to them.
A statutory demand concentrates the mind of those who duck and dive their obligations.
https://www.gov.uk/statutory-demands
Has worked effectively for me in the past.
Good luck
Note, before sending a statutory demand I strongly suggest taking legal advice as per my earlier comment. A statutory demand is effectively part of the pre-action protocol (assuming that court action could, might or will follow) and should ideally be understood as part of the bigger picture.
Last edited by markrlondon; 7th April 2022 at 09:14.
Thanks all, bobar interesting link and possible option
I’ve just asked the question regards initial recovery of debts and court action being next step/cost
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