Essential Corporate News – Week ending 12 January 2024

Parliament: Draft Reporting on Payment Practices and Performance (Amendment) Regulations 2024

On 10 January 2024, the draft Reporting on Payment Practices and Performance (Amendment) Regulations were laid before Parliament (2024 Regulations), together with an accompanying draft Explanatory Memorandum. The 2024 Regulations amend the Reporting on Payment Practices and Performance Regulations 2017 (Principal Regulations) and the Limited Liability Partnerships (Reporting on Payment Practices and Performance) Regulations 2017 (the LLP Regulations) and follow a consultation on the Principal Regulations launched in January 2023.

The Principal Regulations and the LLP Regulations impose a requirement on large companies and limited liability partnerships (LLPs) to publish certain information twice per financial year about their practices, policies and performance in relation to paying suppliers. The 2024 Regulations extend the Principal Regulations and the LLP Regulations beyond their current sunset date of 6 April 2024 to 6 April 2031 and require additional information to be reported by qualifying companies and LLPs.

The 2024 Regulations amend the Schedule to the Principal Regulations which sets out the information that a qualifying company is required to publish in relation to each reporting period. They carry forward the existing reporting requirements. In addition, among other things, the 2024 Regulations do the following:

• Amend the Principal Regulations so that companies will also be required to report the proportion of invoices that are disputed which subsequently result in payments being made outside the agreed payment terms.
• Businesses within scope will be required to report on the percentage of payments which were paid in 30 days or fewer, between 31 and 60 days, and in 61 days or longer, and the percentage of payments due within the reporting period which were not paid within agreed terms.
• Provide clearer instruction as to how payments should be reported when third party ‘supply chain’ finance provider is involved, amending the Principal Regulations to provide that, if the supplier receives the full amount due without having to pay a fee or having any amount deducted from the payment, the date the payment is considered made is the date on which the supplier received the payment from the supply chain finance provider. If the supplier does not receive the full amount or has to bear the cost of any fee for the supply chain finance, the date the payment is made is the date on which the supply chain finance provider received the payment from the qualifying business (discounting any delays outside of the qualifying company or LLP’s responsibility). In all other circumstances, the date the payment is made is the date when it is received by the supplier (discounting any delays outside of the qualifying company or LLP’s responsibility).

The Explanatory Memorandum states that the Government is publishing updated guidance for large businesses in scope of the duty on how to comply.

The 2024 Regulations are expected to come into force on 5 April 2024.

(Draft Reporting on Payment Practices and Performance (Amendment) Regulations 2024 and draft Explanatory Memorandum, 10.01.2024)