This may be fixed by a contract or by established custom and practice, so long as a substantial remedy is provided. In the absence of either of these it will be 8% over the base rate. The base rates at 31st December and 30th June apply throughout the succeeding six month periods. So, for example, if the base rate at 31st December is 5%, the rate of interest that may be charged until 30th June is 13%. It is simple interest only, not compound interest.
Debt recovery costs may be claimed as well as interest. The amount varies according to the size of the debt.
A claim may be made at any time until the matter becomes statute-barred. This is six years in England, Wales and Northern Ireland and five years in Scotland. It is possible to make a claim after the debt has been paid as well as when it is still outstanding. This is potentially a very powerful weapon indeed. A supplier can go back several years and demand statutory interest. This might, for example, be done when an account has been closed and there is no prospect of further business. Such a claim may be made against a liquidator when a company is insolvent.
This may be added to all claims. The statutory rate may be changed from time to time but it has been 8% per year since 1993. Only simple interest may be charged, not compound interest. You might like to note that 8% is equivalent to 22 pence per thousand pounds per day.
Interest at the statutory rate may be charged from the date that payment was contractually due up to the date of the issue of the claim. This is a precise sum that is incorporated into the particulars of a claim. There is no statutory period of credit and, in the absence of an agreement to the contrary, interest may normally be claimed from the date of delivery or performance of the service, provided that payment of the main amount has been requested at the same time, usually by means of an invoice.
The calculations may be very complicated. If there are many invoices, many separate interest calculations may be necessary. It is not necessary to show the individual calculations and only the total claimed need be shown. Of course this must be correct or it may later be challenged by the defendant. It is also possible, and of course desirable, to claim continuing interest up to the date of judgment or earlier payment.
Interest at the statutory rate runs after all High Court judgments. It is charged on the remaining unpaid balance on a day-to-day basis and it does not stop whilst enforcement measures are being taken.
Interest does not run after judgment on county court judgments up to British Pounds 5,000. Interest at the statutory rate does run after judgment on county court judgments over British Pounds 5,000. However, it stops running whilst most enforcement measures are being taken, and also when an application is made for an order to obtain information from a judgment debtor. You might think that the distinctions are not entirely logical, but that is the law.
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