Payment Regulations And Compliance

Rahman Ravelli | View firm profile

Ben Ticehurst explains why new regulations regarding company
payment practices are a sharp reminder of the need to be legally compliant.

Regulations have been laid before parliament to extend criminal
law to help improve smaller businesses’ cash flow by putting new obligations on
larger companies.

This is the latest example of criminal law being used to
affect corporate behaviour – and carries with it risks for those who are
unwilling or unable to comply.

The Reporting on Payment Practices and Performance
Regulations 2017 and Limited Liability Partnerships (Reporting on Payment
Practices and Performance) Regulations 2017, create two new criminal offences
for larger companies who do not meet new standards of reporting their payment

The Regulations require large UK corporates to file
information with the government every six months regarding contracts for goods,
services or intangible property; including standard payment terms, data on late
payment of invoices and details about procedures for resolving payment

Criminal Liability

Any company or LLP can choose to make a report under the
regulations. They will only face criminal liability for failure to make a
report if they meet two of the three following criteria:

* A £36M or more annual turnover.

* A balance sheet totalling £18m.

* Employing at least 250 people.

The first criminal offence under the Regulations is failing
to submit a report of the necessary information to the government within 30
days of the end of the relevant reporting period. The first reporting period is
the next financial year; which begins after April 6 this year.

Directors or designated members can be held to be personally
liable for the criminal offence unless they can show that they took all
reasonable steps to ensure compliance.

Another criminal offence created by the regulations is the
knowing or reckless publication of a report that is misleading or false. This
offence is not only relevant to senior company figures – it also covers third
parties, such as lawyers, accountants or auditors.


Each offence is punishable by way of a fine on summary
conviction at the magistrates’ court. They are the latest offences in a
line that includes Money Laundering Regulations, failure to prevent bribery
under Section 7 of the Bribery Act 2010 and the soon to become law Criminal
Finances Bill: a line that uses the big stick of criminal liability to try and
enforce ethical and responsible corporate behaviour.

Such liability leaves little “wriggle room’’ for the
corporate or senior figure found wanting under such legislation. It places
extra responsibility on corporates and individuals and has gone some way to
placing compliance higher up the agenda.


Compliance is a word that may prompt, at best, mixed
feelings, among many in business. There are those who view it as bureaucracy
that takes up time, effort and cost while yielding little benefit.

But it is worth making the point that anyone who finds
themselves falling foul of these new regulations will have done so because of a
lack of compliance. Maybe then they will understand the value of compliance –
even if it is too late for them to benefit from it.

At Rahman Ravelli, we have helped many companies devise and
introduce compliance procedures in to their workplace. The implementation of
adequate procedures can be a challenge: it involves a complete understanding of
all relevant legislation and an appropriate response to ensure that a company
is acting within the law rather than breaching it.


This can seem daunting. If we look at the new regulations,
for example, they impose more obligations on companies, create new criminal
offences and make individuals liable.

Ensuring that a company and all relevant individuals are
acting legally, therefore, can be a challenge. But that challenge is almost
impossible if strong, adequate compliance procedures have not been devised,
introduced, publicised, regularly reviewed and maintained.

If you are a corporate who will be subject to these new regulations,
you may need to seek expert legal advice regarding the best way to “design
out’’ the potential for breaching them. Such an approach must involve devising
procedures after examining how the company works and the potential for

These latest regulations are, as we mentioned earlier, part
of an ongoing attempt to use criminal liability to enforce good corporate

There is now much less official tolerance of corporate
wrongdoing. This means that prevention of wrongdoing has to be a company’s
priority; otherwise the costs will be far greater than any expense involved in
ensuring you are legally compliant.


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