Who has to report Payment Practices?

All businesses including companies (formed and registered under the Companies Act 2006 or previous legislation) or Limited Liability Partnerships (registered under the Limited Liability Partnerships Act 2000) which exceed the size criteria are obliged to report Payment Practices at least twice a year.

Businesses are in scope of the requirement for a financial year if, on their last two balance sheet dates, they exceeded two or all of the thresholds below:

• £36 million in turnover
• £18 million on its balance sheet
• 250 employees

Entities which are not companies or LLPs under these definitions are not required to report; for example, the reporting requirement does not apply to unlimited liability partnerships, nor to companies which are incorporated under another country’s laws.

The information for the reporting requirement should be prepared and reported on an individual company or individual LLP basis, not at a group level. The reporting requirement is not met if the information is provided on a group basis. 

If a new company or LLP with a new registration is created as a result of a merger or takeover, then the new company or LLP will be excluded from reporting in its first financial year.

Currently around 9,000 of the largest companies in the UK have reported Payment Practices covering over 77,000 individual payment reports. These numbers are set to grow as the Government are looking to increase transparency by reducing the reporting threshold to encourage a better payment culture in the UK.