Pre-Action Protocol for Debt Claims (UK): A Plain-English Guide for B2B Creditors Navigating Debt Recovery

The Pre-Action Protocol for Debt Claims applies in England and Wales where a business is claiming payment of a debt from an individual, including a sole trader. It does not apply to debts owed by a limited company or LLP. Those normally fall under the general Practice Direction on Pre-Action Conduct and Protocols, which expects a clear letter before action and a reasonable time to respond, commonly 14 days for a straightforward unpaid invoice. So your first job is to establish exactly who owes you the money.

Which rules apply to your debtor?

The protocol itself says it covers any business, including a sole trader or public body, claiming payment of a debt from an individual, including a sole trader. It does not apply to business-to-business debts unless the debtor is a sole trader. It also steps aside where another protocol covers the debt, such as construction and engineering or mortgage arrears.

In our experience, creditors often assume the formal debt protocol governs every unpaid invoice. Using the wrong process wastes time, as our guide for international creditors also explains.

What the protocol requires for individuals and sole traders

If your debtor is an individual or sole trader, send a Letter of Claim explaining how the debt arose, the amount outstanding, any interest or charges, the agreement relied on, and how to pay. You should also enclose the required information sheet, reply form and financial statement form. Then allow 30 days before issuing a claim.

If the debtor asks for documents, you should provide them, or explain why they are unavailable, and generally allow at least 30 days after providing the documents before starting proceedings. If they say they are seeking debt advice, allow a reasonable period. If discussions fail after a response has been received, National DebtLine notes that the creditor should usually give at least 14 days’ notice before starting a claim, unless urgent action is needed.

What to do when the debtor is a limited company

If the debtor is a limited company or LLP, the Debt Claims Protocol does not usually apply. You should still send a clear letter before action. State the amount owed, the basis of the claim, the deadline for payment or response, and that you will issue proceedings if the matter is not resolved. Include your right to claim 8% statutory interest where it applies, along with fixed compensation and reasonable recovery costs under the Late Payment of Commercial Debts rules.

The court can penalise unreasonable non-compliance with pre-action conduct through costs, interest or case management orders, so keep a clean paper trail. If the customer raises an objection, our disputed invoices flowchart shows how to separate the disputed amount from the undisputed balance.

Practical steps before you send anything

Before choosing your next step, make sure the debt and the debtor are correctly identified.

• Confirm the debtor’s legal status before choosing your process, using Companies House checks for companies.
• Run credit checking to see whether a claim is likely to pay off.
• Keep the contract, invoices, proof of delivery, account statements and chasing history together in one file.
• Compare a statutory demand with standard debt recovery if the debt is undisputed and the amount meets the relevant threshold.
• Consider whether collectors or lawyers suit the stage you are at.

After the deadline passes

Most debts settle before a claim is issued, as we explain in how often agencies take debtors to court. If the debtor still does not pay or respond, the next step may be a money claim, but issuing proceedings should be a commercial decision, not just a procedural one. Check the evidence, the debtor’s ability to pay and whether the likely recovery justifies the cost.

If you do win judgment, payment is not guaranteed, and our guide to judgment and enforcement covers the next steps. For overseas debtors, our international debt collection service handles the jurisdiction questions, and construction creditors can use our construction debt collection team. If chasing is eating into your week, outsourced credit control keeps invoices moving before they reach this stage.

Not sure which process applies to your debtor? Speak to our team for a free, no-obligation conversation before you send your first letter.