SMEs Denied Access To Justice In Court Fees Shake-Up

Access to Justice for SMEs across the UK was dealt a hard blow in recent weeks. Following a Government consultation last year, in March 2015, a new Court Fee tariff was introduced. As a result, the Court Fees for money claims to recover overdue debt from businesses rose in some cases by a staggering 622%. 

The biggest concern is the impact it will have on money claims worth £10,000 or more where the court fee is 5%. Although most commercial debts are smaller than this, the impact of debts of this size, or greater, can be significant. The fear is that this huge increase in Court Fees will result in firms simply writing off the bad debt. But you do not have to do this, there are other options.

For larger debts, businesses may be tempted to go straight into insolvency proceedings to recover their money, as a more cost-effective solution than issuing a County Court claim. For example, an overdue debt of around £50,000 involves a court fee of only £280, whereas a court claim fee would now be £2,500.

Insolvency petitions cannot, however, always be used, so it has therefore become even more crucial that firms seek professional advice on mitigating the risk of bad debt at an early stage. Simple, cost-effective solutions such as a Letter Before Action (LBA) or Late Payment Demand threatening legal action should be explored as 8 times out of 10 this will elicit the desired response from the customer.

Lovetts has recently launched an email LBA at a mere £1.50, cutting the cost even further for SMEs. 

14 May 2015