loading
My Account
Basket (0)
Contact Us Email Newsletters
Search


Reporting of Payment Practices and Performance Regulations 2017 for Large Entities

By Julia Penny

Two new Statutory Instruments deal with this topic, SI 2017/395 covering the requirements for companies and SI 2017/425 for LLPs. The Regulations came into force on 6th April 2017 applying to financial periods commencing on or after that date. They require companies and LLPs to publish a report on the web-based service set up for this. As you might expect, the report must be approved by a director, or designated member in the case of an LLP.

The guidance provided by BEIS sets out a table summarising the start dates for various financial periods, assuming that these are not the first year of existence for the LLP or company (when no report is required as explained below).

Financial Year beginning

What is the first reporting period?

When must the first report be published on the web service?

1st January

1st January 2018 to 30th June 2018

On or before 30th July 2018

1st April

1st April 2018 to 30th September 2018

On or before 30th October 2018

5th April

5th April 2018 to 4th October 2018

On or before 3rd November 2018

6th April

6th April to 5th October 2017

On or before 4th November 2017

After 6th April

First six months of the business’s 2017-18 financial year

Within 30 days starting on the day after the end of the business’s first reporting period.


The Regulations apply to qualifying companies for which there are size and other criteria. For example, a company or LLP is not a qualifying one in its first financial year. Once out of its first year, a company or LLP will qualify if it exceeds two or three of the medium-sized thresholds (i.e. it is large – see thresholds below) for both the previous and current year just ended. A parent company is qualifying if both it and the group it heads exceeds the thresholds.

Current Medium-Sized thresholds

  • Turnover £36m (Gross £43.2m)
  • Balance sheet total £18m (Gross £21.6m)
  • Employees 250

The qualifying contracts to which the regulations relates are:

  • those governed other than by choice of the parties, by United Kingdom law; or
  • where the parties have chosen for the contract be governed by such UK law, there is also a significant connection with the UK; or
  • governed by a foreign law by choice of the parties and without that choice it would be governed by UK law and there is no significant connection with any country outside the UK.

Reports required

The reporting period is a 6 monthly one, starting with the first 6 months of the relevant financial year, with further provisions regarding short and long accounting periods. It is an offence, punishable by fine, for both the company and each director if there is a failure to file the relevant report.

Information required in the report

The information required is set out in the Schedule to the SIs and in summary includes (the requirements for LLPs would be equivalent):

  • A description of the qualifying company’s standard payment terms (in days) in relation to qualifying contracts. If there is any variation from the standard terms, details of this and any consultation with the supplier prior to making the variation are required.
  • An explanation of the company’s process for dispute resolution with suppliers in relation to payment.
  • Whether there is an arrangement that a finance provider can pay the supplier earlier than the point at which the company pays the finance provider.
  • Whether the company’s policies provide for the electronic submission and tracking of invoices.
  • Whether the company is a signatory to a code of conduct or standards on payment practices and if so the name of that code.
  • Whether the company’s practices and policies allow deduction of a sum from the payment to stay on the list of the company’s suppliers.
  • A statement of the average number of days taken to make such payments
  • The percentage of payments made within:

o   1-30 days

o   31-60 days

o   After 60 days

  • The percentage of payments due in the period which were not made in the period.
  • A statement as to whether any sum has been deducted from a supplier’s payment as a charge to stay on the list of the company’s suppliers.
  • The name of the director approving the information set out in the report.

Notice that the information above is required on a company basis, not on a group basis.

The report above will be logged onto a web-service, but this is not currently available. If you wish to explore the digital service then you can email to ask for an invitation. Presumably at present the service is in some sort of Beta state.

Guidance is available from BEIS here and contains useful examples regarding whether the size thresholds are met, and a flowchart to determine whether the company/LLP is caught by the Regulations.



Follow me on twitter @JSPenny

 

June 2017 

 

Disclaimer
This article is published with the understanding that SWAT UK Limited is not engaged in rendering legal or professional services. The material contained in this article neither purports, nor is intended to be, advice on any particular matter. This article is an aid and cannot be expected to replace professional judgment. SWAT UK accepts no responsibility or liability to any person in respect of anything done or omitted to be done by any such person in reliance, whether sole or partial, upon the whole or any part of the contents of this article.

 

Search Accountancy News

Enter Keywords
Filter by Content Types
Filter by Date
From :  
To      :  
Filter by Categories
Filter by Issues or Groups
Filter by People

 

 

Search News by Topic