Under new rules that came into effect in the UK on 6 April 2017, certain large companies and large limited liability partnerships (LLPs) will be required to regularly publish public reports on their payment practices and policies.
The duty to publish a report on payment practices and performance is imposed by new regulations1 in the UK (the "Regulations"). The Regulations are directed at large businesses in the UK but overseas businesses with eligible UK subsidiaries may also be affected. Eligible businesses will have to publish information in relation to their supplier contracts, payment terms, applicable dispute resolution procedures and payment lead times. Failure to comply with the Regulations is a criminal offence and both an eligible business and its directors or designated members may be liable. The Regulations are an attempt to create a more responsible payment culture and are in step with other recent legislative developments in the UK and Europe more generally, including the UK Modern Slavery Act 2016 and the Companies, Partnerships and Groups (Accounts and Non-Financial Reporting) Regulations 2016, which are intended to enhance the consistency and comparability of certain non-financial information disclosed by large businesses. On 6 April 2017, the UK also implemented a mandatory Gender Pay Gap Reporting Regime.' Is your business affected by the Regulations?
Broadly speaking, a business will be covered by the Regulations and required to deliver a report if:
it is an individual company (whether private, public or quoted) that is incorporated or registered in the UK, or an LLP and; it has exceeded at least two of the thresholds below on both of its last two balance sheet dates: £36 million+ annual turnover £18 million+ balance sheet total 250+ employees The Regulations also apply slightly modified thresholds to parent companies and parent LLPs (i.e., companies and LLPs that have one or more subsidiaries). Each applicable company or LLP within a group will need to report separately.
What if your business is outside the UK?
Companies and LLPs incorporated outside the UK, including overseas companies that register a UK establishment, are generally excluded from the reporting requirements. However, if an overseas business has a UK-incorporated subsidiary that meets the required thresholds, such subsidiary would be required to comply with the reporting requirements of the Regulations.
What are the reporting requirements?