§ Baroness Greengross
asked Her Majesty's Government:
Whether the late payment legislation applies to contractual payments by local authorities to voluntary organisations. [HL4613]
§ The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Sainsbury of Turville)
The late payment legislation applies to contracts for the supply of goods and services where both parties are acting in the course of a business.
"Business", as defined by the legislation, includes the activities of central and local government and those of other public authorities. The term may also cover the activities of a voluntary organisation, although this would depend on the precise nature of the contractual relationship involved.
If a voluntary organisation is providing goods or services for the local authority, and earning payment for this, the "business" test may be satisfied. If, conversely, the voluntary organisation is in a position tantamount to that of a consumer, then the test is not likely to be satisfied, meaning the legislation will not apply to the transaction.
Ultimately, whether the legislation applies to the facts of an individual case is a matter for judicial determination. However, the Government strongly encourage all recipients of goods or services, whether public sector or not, to pay their bills on time.