Small claims for
an unpaid invoice

Court is the last step, and most invoices never need it. But when a customer ignores every reminder, a money claim is straightforward, cheap relative to the debt, and designed for people who represent themselves. This guide covers England and Wales; Scotland and Northern Ireland have their own processes.

First: the letter before action

Before you claim, send a letter before action. It sets out what is owed and why, and says you will go to court if the debt is not paid. The court expects it, and skipping it can cost you when costs are decided.

If your customer is an individual, including a sole trader, the Pre-Action Protocol for Debt Claims applies: the letter must include certain information and forms, and you must wait 30 days from the date of the letter for a reply before you start proceedings. For a company, give a reasonable time to respond, usually 14 days in a straightforward case.

Is it a small claim?

The small claims track is the normal track for claims with a value of up to £10,000. It uses simpler procedures, hearings are informal, and the losing side usually pays only limited costs, so you are not exposed to large legal bills.

Court fees

You pay a court fee when you claim, based on the amount you are claiming plus any interest:

If you win, the fee is normally added to what the defendant must pay.

Adding interest and compensation

You can include interest in your claim. For a business customer, claim statutory interest under the Late Payment of Commercial Debts (Interest) Act 1998, and the fixed compensation, rather than the court's general rate; the late payment interest calculator gives you the figures to state. The guide on charging interest on late payments explains the rules.

Making the claim

You can claim online or by post. You will need the defendant's correct name and address: a sole trader's own name, or a company's registered name and office, which you can check on Companies House. Describe the claim briefly: the goods or services, the invoice number and date, the amount and the due date.

The claim is sent to the defendant, who must respond. They can pay, admit the debt and offer instalments, defend it, or do nothing. If they do nothing by the deadline, you can ask for judgment by default.

Mediation and hearings

If the claim is defended, the court may refer it to its free small claims mediation service, and in many small claims mediation is now part of the process. Many disputes settle there. If not, there is a hearing, often short and informal, where each side explains its case with the documents: the contract or quote, the invoice, and your chasing record.

After judgment: enforcing it

A judgment tells the defendant to pay; it does not guarantee they will. If they do not, you can ask the court to enforce it, for example by sending enforcement agents or taking money from wages or a bank account, each for a further fee. Check whether the defendant can pay before you start; a judgment against someone with nothing is hard to collect.

Is it worth it?

Weigh the debt against the fee, your time and the chance of collecting. For many small debts, the letter before action alone produces payment, because a customer who sees a court claim coming often pays. Keep your invoices, correspondence and chasing log from the start, so the decision is easy if you reach this point.

Before you claim: a readiness checklist

Naming the right defendant

The defendant is whoever owes you the money, and it must be named exactly. For a sole trader, that is the person, with any trading name: "Jane Smith trading as Smith Interiors". For a limited company, it is the company's registered name and registered office, which you can check free on Companies House. For a partnership, the partnership name. Getting this wrong is one of the commonest reasons small claims stall. Your invoices should already show the customer's correct name; see what a UK invoice must include.

Working out what to claim

Your claim is the unpaid amount plus interest, and the court fee on top. For a business customer, claim statutory interest under the Late Payment of Commercial Debts (Interest) Act 1998 and the fixed compensation of £40, £70 or £100, and say so in the claim. The late payment interest calculator gives the interest to date and the daily rate to state, so the court can add interest up to judgment. The guide on the Late Payment Act explains the rules.

What happens after you claim

The defendant can respond in several ways, and each leads somewhere different.

• They pay. Tell the court the claim is settled.
• They admit the debt and offer instalments. You can accept, or ask the court to decide the rate.
• They do nothing. After the deadline, you can ask for judgment by default.
• They defend the claim. The claim goes to the small claims track, usually with mediation first, then a hearing if it does not settle.

At the hearing

Small claims hearings are informal and often short. The judge reads the papers, asks each side questions and decides. Bring the agreement, the invoice, evidence the work was done, and your chasing log. Keep to the facts: what was agreed, what you did, what you invoiced, and what was paid. If the customer's defence is a quality complaint, evidence of the finished work and any unanswered offers to put things right are what matter; the guide on invoice disputes explains how to build that record early.

Settling before the hearing

Most claims never reach a hearing. A customer who receives court papers often pays, or offers to. If they offer less than you claimed, weigh it honestly: a certain payment now against the time of a hearing and the risk of losing part of your claim. Put any settlement in writing, with dates for payment, and tell the court once you have been paid. If the settlement is broken, you can go back to the court. The same principle applies earlier: a well-drafted letter before action settles far more debts than claims do, which is why the guide on how to chase an unpaid invoice puts it before any claim.

Scotland and Northern Ireland

This guide covers England and Wales. Scotland uses the simple procedure for lower-value claims, and Northern Ireland has its own small claims process, each with different limits and fees. GOV.UK links to both from its guide to making a court claim for money.

Tax and VAT on recovered money

Money you recover for the invoice is the income you were always owed. Statutory interest and compensation are income too. If you are VAT registered and had claimed VAT bad debt relief on the invoice, you must repay that relief to HMRC when the debt is later paid.

Common questions

Do I need a solicitor? No. Small claims are designed for people to bring themselves.

Can I claim for my time spent chasing? For business customers, the fixed compensation covers recovery costs, and reasonable costs above it can be claimed. Small claims limit the legal costs that can be recovered, so do not expect to recover solicitor's fees.

What if the customer is a company that has closed? Check Companies House. A company in liquidation or dissolved cannot simply be sued in the usual way; you may need to claim in the insolvency instead.

Preventing the next claim

A court claim is a sign that something earlier in the process failed. For the next job with a similar customer, agree terms in writing, take a deposit, invoice in stages, and chase from day one. The guides on invoice payment terms and charging interest on late payments cover each step.