1. The source statute
The locked wording: Late Payment of Commercial Debts (Interest) Act 1998: statutory interest is Bank of England base rate + 8 percentage points; compensation tiered at £40 / £70 / £100 by invoice value. The Act provides a statutory entitlement to interest on commercial debts paid late.
2. When the entitlement crystallises
The entitlement applies to "commercial debts" under B2B and B2G contracts. The clock starts on the day after the agreed payment date and stops when the debt is paid in full.
3. The interest rate
Statutory interest is the Bank of England official base rate prevailing on the relevant reference date (30 June or 31 December), plus 8 percentage points. The Calculator applies the correct reference rate for the period.
4. The fixed-sum compensation tiers
- £40 for debts under £1,000.
- £70 for debts of £1,000 to £9,999.99.
- £100 for debts of £10,000 and over.
5. The Calculator's output
The Calculator produces a one-page itemised statement showing interest accrual and fixed-sum compensation, suitable for enclosing with a formal demand letter.
6. Edge cases
The Act does not apply to consumer debts (B2C) or where the contract excludes the Act under section 8 controls. The Calculator flags these non-applicable scenarios.
7. The waive-or-charge decision
It is a statutory entitlement. You can choose to charge or waive to preserve relationships, but the entitlement remains yours by law until waived.
8. What the Calculator does not do
It does not chase the debt or draft the letter before action. Those capabilities live in CrowCash, which adds AI likelihood scoring and audit logs.
9. References
- Late Payment of Commercial Debts (Interest) Act 1998.
- Late Payment of Commercial Debts Regulations 2013.
- Bank of England, Bank Rate historic data.