Prompt Payment of Accounts
CSO is committed to ensuring that suppliers are paid promptly. In this regard suppliers can help by ensuring that they provide correct invoices, accurate bank account details and by ensuring that their Tax Clearance status with the Irish Revenue Commissioners is up to date. In the case of all public sector contracts of a value of €10,000 (inclusive of VAT) or more within any 12-month period, the contractor (and agent or sub-contractor as appropriate) will be required to produce either a valid tax clearance certificate or a C2 certificate. This is a mandatory requirement. Full details on tax clearance procedures may be found on the Revenue Commissioners website.
Payment of invoices by the CSO is governed by the Prompt Payment of Accounts Act, 1997 as amended by the European Communities (Late Payment in Commercial Transactions) (S.I. No. 580 of 2012). The Regulations, which apply equally to the public and private sectors, provide an automatic entitlement to interest and compensation if payment for commercial transactions is late.
If the date or period for payment is not fixed in the contract, the creditor is entitled to interest for late payment upon the expiry of any of the following time-limits:
- 30 calendar days following the date of receipt of goods or services, or date of receipt of the invoice or an equivalent request for payment, whichever is the later
- The standard deadline for public authorities to business payments is 30 days. Payment can be extended up to 60 days only if it is “expressly agreed” and justified in light of the nature or feature of the contract.
In the event of an incorrect or inadequate invoice being received from a supplier, the purchaser has 10 working days to return the invoice, with a written statement identifying the defects that prevent the payment being made. In the case of a disputed invoice, any goods or service included in the invoice that are not disputed must be paid for by the due date.
Interest must be paid in respect of the period beginning on the date after the due date of payment and ending on the date on which the payment is received by the supplier. The interest payment cannot be waived by the supplier. Under the terms of the Act, CSO is required to furnish an annual review to the Department of Jobs, Enterprise and Innovation regarding payment practices and the number and value of late payments.
The Regulations provide that unless otherwise specified in an agreed contract, the interest rate will be the European Central Bank main refinancing rate (as at 1 January 2013) plus 8 percentage points (with effect from 16 March 2013). The ECB rates in force on 1 January and 1 July apply for the following six months in each year. Only one rate will apply to a late payment – that is the rate in force on the payment date. This rate cannot be negotiated with the supplier.
With effect from 1st July 2013, the current late payment interest rate is 8.5% per annum (that is based on the ECB rate (as at 1 July 2013) of 0.5% plus the margin of 8%). That rate equates to a daily rate of 0.023%. Penalty interest due for late payments should be calculated on a daily basis. The ECB rate can be checked on the Central Bank and Financial Services Authority of Ireland website www.centralbank.ie.
The €5 minimum interest payment has been abolished. Small amounts of interest for late payment can be charged. There is no minimum interest payment applicable.
In addition to receiving interest on late payment the supplier is also entitled to automatic compensation (without the need to issue a reminder) of a minimum of €40 if the invoice is less than €1,000.
The schedule to the Statutory Instrument provides for the amount of compensation payable under
Regulation 9 as follows:
- Not exceeding €1000 €40
- Exceeding €1,000 but not exceeding €10,000 €70
- Exceeding €10,000 €100
The legislation does not oblige payment to be made to a supplier who has failed or refused to comply with a request to produce a tax clearance certificate and it expressly extends the statutory time limit for payment where there are delays in furnishing a tax clearance certificate. Also the Act does not affect the deduction of withholding tax from any payment to a supplier.
New 15-Day Payment Requirement, June 2009
The Government introduced a further non-statutory requirement in June 2009 to reduce the payment period by Government Departments and Offices to their suppliers from 30 to 15 days. Every effort, consistent with proper financial procedures, is being made to ensure that all suppliers are paid within this timeframe. Prompt Payments Reports are posted on the CSO website.