Contractors face huge court fee rise

Monday 26 January 2015

Contractors, limited companies and sole traders wishing to take a dispute with a client to court could see a significant hike in fees.

For claims that are over £10,000, the fee to take it to court will go up by as much as 622 per cent. Critics say that this will affect the smallest businesses in the UK disproportionately.

The decision to increase court fees was brought in by the Ministry of Justice (MoJ) as a means of raising £120 million. Following consultation on its plans, the department will be setting fees to use commercial courts at five per cent of the value of the claim for all that are worth over £10,000.

Calculations from the Civil Justice Council show that this means that for a claim worth £15,000, fees will rise by 23 per cent from £610 to £750. Additionally, a claim worth £190,000 would go up by 622 per cent from £1,315 to £9,500.

The MoJ does intend to put a cap in place at £10,000 for the amount that commercial court fees could cost.

Responding to the announcement that court fees are set to go up, the Association of Independent Professionals and the Self Employed (IPSE) considered how this might affect small businesses trying to chase late payment.

It previously suggested putting a small business conciliation service in place to aid firms in settling disputes over late payments without having to go to court. With fees set to rise, IPSE says that it is now more important than ever to aid small businesses in recovering these payments.

Senior public affairs manager at IPSE Andrew Chamberlain said: "Government plans to increase court fees will hit the UK’s smallest businesses disproportionately. Late payment is a major issue for independent professionals. Currently, pursuing a claim through the courts is the only means they have of getting the money they need to keep their business afloat.

“Government should be making it easier, not harder for businesses to address the scandal of late payment. To truly put an end to this problem, IPSE called for a small business conciliation service to be set up, which would resolve disputes without lengthy court action, and strengthen the Prompt Payment Code."

Mr Chamberlain added that IPSE was pleased when the Conservative party pledged to take action on this and said that he hopes all major political parties will commit to it before the general election in May.

Additionally, the Civil Justice Court expressed concern that the fee increases will hit small businesses hard. It fears that the raised fees could price some people out of the courts altogether and could have a disproportionate effect on small and medium-sized enterprises.

This was a concern that was echoed by the British Chambers of Commerce, which said it was astonished that the MoJ decided to go ahead with the fee increases.

By Victoria McDonnell

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