Some of the measures included in the regulation already existed; however, others have been introduced that, for the first time, make it clear that you should not end up out of pocket at all if you have to take action against non-payment.
Firstly, let’s look at the measures that were already in place – and these include a three-tier fixed-fee system of penalty charges for late payment, as well as the right to add statutory interest to the amount owed.
The fixed fees are: £40 on amounts owed of up to £1,000; £70 on sums up to £10,000; £100 on any larger amount owed.
Significantly under the new Directive, you can now also add any reasonable additional costs to the amount claimed, in order to cover your own fees incurred in chasing the debt.
For the first time, it is enshrined in law that you can reclaim these costs from the debtor, rather than paying them out of the amount that is successfully reclaimed.
You cannot profit from doing so – if you add extra costs above the relevant three-tiered fixed fee, the total of the two combined must not exceed the amount you have had to pay to chase the debt.
However, this means it should cost you nothing to reclaim what you are owed, while the statutory interest can add to the total, potentially by a significant degree on debts that have been owing for several years.