Partner Article

Law firm warns ahead of government changes

International law firm Hill Dickinson is advising businesses looking to pursue money claims for more than £10,000 to be aware of the impending hike in court fees after the Government announced significant changes which are due to come into force in April this year.

The decision, which follows the Enhanced Court Fees Consultation process, will see an increase in the court issue fees payable to commence legal proceedings for claims over £10,000. The new fees will be calculated at 5% of the value of a claim, which replaces the previous fixed fees that were based on the value of the claim.

Philip Sheard, Legal Director at Hill Dickinson, explains: “A claim with a value of £45,000 previously fell within the £15,000 to £50,000 bracket and, therefore, attracted a Court fee of £610.However, after 1 April 2015, the same claim will attract a Court fee of £2,250 – a substantial increase.”

Fees for claims of less than £10,000 are unaffected by these proposals and will remain at their current levels and will, therefore, depend on which bracket the claim falls into. The Government’s reasoning behind the changes is that 90% of claims issued fall below the £10,000 limit and, therefore, the majority of claimants will be unaffected by the changes.

Philip continued: “We would strongly advise businesses to take steps in relation to outstanding debt at the earliest possible opportunity rather than allowing it to increase over time before issuing one single claim. Taking action now and avoiding claims snowballing to over £10,000 will ultimately reduce the costs payable in Court proceedings.

More importantly, identifying problem debtors is key to ensuring businesses are not disadvantaged by these increased costs. The ability to physically recover these costs from a debtor even after a Court Judgment has been obtained depends on the debtor’s assets and means to pay. A lower costs liability of a debtor makes a full recovery more probable. A higher costs liability may tip a debtor into insolvency and substantially reduce the prospects of even a partial recovery.“

He concluded: “By issuing Court proceedings on a regular basis as and when monies fall due for payment, rather than periodically as they accrue, may ultimately prove more cost-effective. For debts of more than £10,000, issuing proceedings prior to the planned increase would also be a useful tactic to avoid the higher court issue fees.”

This was posted in Bdaily's Members' News section by Hill Dickinson .