Claiming Interest


Interest on outstanding invoices is a topic that people frequently ask me about and when I get asked, ‘Can I claim interest on outstanding invoices?’, the simple answer isyes’.

In the Court of Appeal case of Carrasco v Johnson, Lord Justice Hamblen clarified the position: interest is not awarded as compensation for damage done but for the claimant being kept out of money that ought to have been paid.

It should always be remembered that the court has a discretion as to the rate to be awarded and the period on which it is payable. It should also be remembered that the court will have regard to whether the monies due are from individuals or a commercial party

What are the three types of interest claims?

  1. Contractual – where there is a clause within the company’s terms and conditions of business saying that if payment of invoices are not made within terms, interest will become payable at the rate of 4% above the bank’s base rate from the date of default until full payment is received;
  2. Under S69 of the County Courts Act 1984 or section 35A of the Senior Courts Act 1981 (formerly Supreme Court Act 1981) at the rate of 8% per annum. A claim for simple interest on a debt or damages under these statutes is discretionary. As it is for the court to award interest at such a rate and for such a period as it deems fit, it is always worthwhile challenging both the period and the rate of interest claimed.
  3. Interest under the Late Payment of Commercial Debts (Interest) Act 1998. This will only apply business to business. The Late Payment Act inserts an implied term in the contract, giving the creditor a right to simple interest on the price, plus a fixed sum and reasonable costs of recovery. Interest will be 8% per annum above the Bank of England base rate. The Bank of England base rate on 31 December will be the reference rate for 1 January to 30 June, and the Bank of England base rate on 30 June will be the reference rate for 1 July to 31 December.  If, for example, the Bank of England reference rate is 3.5%, the total interest rate will be this plus 8%, making 11.5%. Please check the late payment legislation for more details.

What needs to be included in a claim for interest on outstanding invoices?

As soon as the payment is overdue, the customer will need to be made aware. This can be detailed in a written format, which will include:

  • reference of the invoice(s) overdue,
  • compensation that you will be claiming for the late payment(s),
  • how much interest is being accrued on a daily basis,
  • how much the customer owes currently, and
  • how the customer can pay.

We’re here to help with interest claim on outstanding invoices

We understand you may need to talk to a professional to help you find out how you can raise a claim for interest. For advice on any debt recovery matter, speak to our specialist team of experts by phoning 01782 205000 or email me at