Contractors face 'major' hike in commercial court fees

Fees to take a commercial dispute above £10,000 to court will surge by up to 622 per cent, in a price rise critics warn will have a “disproportionately adverse impact on small businesses.”

Companies in supply chains, such as PSC contractors, were identified this week as among the biggest losers of the fee rise, which the Ministry of Justice has decided upon to raise £120million.

The department says that, having consulted on its plans, it will go ahead to set fees to use the commercial courts at 5 per cent of the claim’s value, for all claims over £10,000.

While it is only a small percentage, it means fees to issue a £15,000 claim will rise by 23% from £610 to £750. Or to issue a £190,000 claim, the fee will rise by 622%, from £1,315 to £9,500.

Calculations by the Civil Justice Council also show that launching a £200,000 claim will cost 576% more, rising from £1,515 to £10,000. The latter figure the MoJ proposes as a cap that fees for using the commercial courts won’t rise above.

Primarily an advisory body, the council mildly welcomed the cap but spoke of being “extremely concerned” by the “major” fee increases, which it warns will hit small firms hard.

Indeed, it says the inflated fees risk “pricing many court users out of the courts” altogether, and will likely exert a “disproportionately adverse effect on… small and medium enterprises.”

Top judges share the concern for SMEs, as does the business community itself. The British Chambers of Commerce, for example, reportedly finds it “astonishing” that the MoJ is going ahead with the fee increases.

And contractor trade body IPSE says the increases will indeed hit the smallest businesses “disproportionately,” because many of them still have to pursue their dues in court.    

“Government should be making it easier, not harder for businesses to address the scandal of late payment," said IPSE’s public affairs manager Andrew Chamberlain.

“A small business conciliation service is [now] more important than ever to help micro-businesses avoid lengthy and costly court action.”

Brushing off the concerns, the MoJ said that its research has found that most respondents felt court fees were “affordable,” and did not influence their decisions to bring cases to court.

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Written by Simon Moore

Simon writes impartial news and engaging features for the contractor industry, covering, IR35, the loan charge and general tax and legislation.
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