A hike in court fees could push SMEs into insolvency

There are concerns that a rise in court fees could lead to a decline in smaller businesses seeking justice and higher insolvency numbers.

A report from the Law Society highlighted the potential issue, saying that court fees could jump by as much as 600 per cent after government-led changes take effect in April this year.

The total value of cases brought to court by SMEs could actually halve as a result, according to information gathered from almost 200 solicitors.

It would become very difficult for businesses to pay the fees involved in challenging unpaid invoices, leaving just one option: insolvency, the Law Society said.

A government announcement in January said the fee for bringing a claim worth more than £10,000 will rise to five per cent of the sum claimed, with a maximum fee of £10,000. And calculations from the civil justice council show that court fees on a claim to the value of £200,000 will increase by £8,725.

“The UK prides itself on its entrepreneurs and start-ups,” says Law Society president Andrew Caplen, “but the government’s 600 per cent hike in court fees could cripple the small and medium-sized businesses that plays a vital role in our economic society.”

“Companies suffering cash flow problems as a result of unpaid invoices simply do not have money in the bank to stump up extortionate court fees,” he added.

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