The EU Late Payment Directive came into force on March 16th 2013, and its full name is European Directive 2011/7/EU.
It covers certain rights granted to creditors who are paid later than the agreed deadline, designed to prevent them from being left out of pocket by overdue payments.
Importantly, it is not really intended to penalise the debtor, beyond repaying what they owe with reasonable costs and interest on top.
One significant aspect of the EU Late Payment Directive is that, for the first time, it introduced the right to reclaim debt recovery costs from the debtor, by adding them to the total debt.
This is in addition to the pre-existing ‘three tier’ system of fixed penalties used in the UK, which was retained under the UK version of the Directive, while a euro-currency equivalent was introduced in other EU member states.
And there is also a right to charge statutory interest on the debt, which is separate from the penalty fees and costs.
You should be aware though, that the fixed penalties – £40 on debts up to £1,000, £70 on debts up to £10,000, and £100 on larger sums – count towards any debt recovery costs you incur.
So for example, if you were to chase a debt of £2,000 and incurred costs of £200, you would be able to claim back the statutory £70 for a debt of that size, along with a further £130 for your remaining expenditure; you would not receive £270 by claiming the full costs on top of the standard penalty.
With this caveat in mind, in principle the law should allow you to claim back whatever you have spent, providing the actions you have taken are reasonable.
The Directive itself states: “The creditor shall, in addition to the fixed sum … be entitled to obtain reasonable compensation from the debtor for any recovery costs exceeding that fixed sum and incurred due to the debtor’s late payment.
“This could include expenses incurred, inter alia, in instructing a lawyer or employing a debt collection agency.”
So in short – yes, the EU Late Payment Directive should allow you to reclaim the full cost of any reasonable debt recovery activities from the debtor, with little to no ambiguity remaining in the wording of the legislation.