What Steps Should I Take If I'm Owed ￡7000 in Unpaid Invoices in the UK?

If you find yourself holding unpaid invoices worth ￡7000 in the UK, taking the right legal steps is crucial. This article provides a comprehensive guide on what you can do to recover what is rightfully yours.

Seek Legal Advice

The first and most important step is to seek legal advice. A well-formulated letter threatening legal action can often be sufficient. It serves as a powerful deterrent. You are entitled to be paid within 30 days unless other terms have been formally agreed.

Statutory Demands and Interest

Alongside seeking legal advice, you can also issue a statutory demand for the amount owed. If the amount is more than ￡5000, you have the right to petition to have the company put into bankruptcy. However, it may be a last resort, and you should consider whether the company is already in the process of bankruptcy.

Additionally, you are entitled to claim interest on late payments after 30 days. Common rates for interest are around 4.5% to 5.5%, which is typically above the base rate.

Challenging Debts in the UK

The UK's civil litigation system for small businesses is problematic. The money claim online process, as well as the small claims court, are designed to be accessible, but they can lead to costly and potentially futile endeavors.

For instance, the small claims track allows the submission of hearsay evidence, which can be misleading. In one case, an innocent witness was used to submit a fraudulent statement, and the court processed it without proper verification.

Common Issues with the Small Claims Track

The small claims track is not designed to provide fair trials. Parties are expected to file their documents promptly. A failure to do so can lead to the loss of key evidence. In one instance, a client failed to file a defense and counterclaim, causing a default judgment to be set aside after 3 weeks, which was a fatal breach for them.

Furthermore, the court often loses documents, which can invalidate key pieces of evidence. In another instance, a crucial witness statement was not admissible due to the court having no record of the application for relief from sanction, leading to the case being dropped.

Preventing Future Debt Issues

The best solution to avoid such complications is to prevent the problem from happening again. Always run thorough credit checks on clients and request deposits to offset against the debt. It's also advisable to get directors' guarantees for small and medium-sized enterprises (SMEs), as they are often the most problematic clients.

Overall, while the UK's legal system can be challenging, with proper legal advice and preventive measures, recovering unpaid debts is more manageable. If you're owed ￡7000, take these steps seriously and consult with a legal expert to guide your next actions.