Extension of payment practices reporting regulations and report on general review into payments and cash flow

The Department for Business and Trade (DBT) has published its response on proposals to extend and strengthen the Reporting on Payment Practices and Performance Regulations 2017 and the Limited Liability Partnerships (Reporting on Payment Practices and Performance) Regulations 2017.

These two sets of Regulations require large UK companies and LLPs to produce a report on their invoice payment practices every six months and submit the report to a government-hosted website for publication.

The response, which follows a consultation in January 2023, confirms that the Regulations will be extended beyond the current expiry date of 6 April 2024 for up to seven years, with a review to take place after five years. The information required to be reported under the Regulations will also be expanded to include the following additional information:

• New reporting metric – Qualifying businesses will be required to report the total value of payments due in the reporting period that have not been paid within agreed terms, in addition to the existing volume reporting requirement;
• Disputed invoices – An effective method of reporting the proportion of disputed invoices will be introduced (while still including them as late payments in overall payment data);
• Supply chain finance – The dates to be used for reporting when supply chain finance is used will be made clearer;
• Retention payments – Construction companies will have to include information on standard retention payment terms and performance; and
• Sector information – Businesses will be required to include sector identification in their payment reports.

The question of whether businesses should include their payment practices report, or a summary thereof, in their annual report will be considered further following the conclusion of the Non-Financial Reporting review launched in May 2023 (see our blog post here).

The response does not set out a timeline for the amendments to be made but the extension will need to be in place before 6 April 2024.

The DBT has also published a report on its general review into payments and cash flow, which sets out various actions that the government will take to improve payment practices in the UK. As well as the extension and expansion of the Reporting on Payment Practices Regulations, those actions include:

• using new digital processes at Companies House to help identify businesses which should be complying with the Regulations (see our blog post on the fundamental reforms to, and new powers for, Companies House); and
• strengthening payment practices across the public sector and excluding suppliers with poor payment practices from public procurement.

Some of these actions require primary legislation so will be subject to the legislative timetable.