How long do you have to recover a business debt? Limitation periods explained
Every unpaid invoice has a deadline for taking it to court. Miss it and the debtor has a complete defence, however clear the debt. Here is how long you have, when the clock starts, and what restarts it.
The periods
| Where | Period | The law |
|---|---|---|
| England and Wales | 6 years | Limitation Act 1980, section 5 |
| Northern Ireland | 6 years | Limitation (Northern Ireland) Order 1989 |
| Scotland | 5 years | Prescription and Limitation (Scotland) Act 1973 |
In England, Wales and Northern Ireland the debt still exists after six years, but a court claim on it will fail if the debtor raises the point. In Scotland the effect is stronger: after five years the debt itself is extinguished.
When the clock starts
The period runs from the day the money fell due, not the day you raised the invoice. An invoice dated 1 March on 30-day terms starts its clock on 31 March. Each invoice has its own date, so an account with a long history has many clocks running at once.
Statutory interest and compensation under the Late Payment of Commercial Debts (Interest) Act 1998 are debts too. They follow the same rule, which is why interest on an invoice paid late can still be claimed years afterwards, as long as you stay inside the period.
What restarts it
In England, Wales and Northern Ireland two things start a fresh period:
- A written acknowledgment signed by the debtor. An email or letter that accepts the sum is owed will usually do. A promise made on the phone will not.
- A part payment. Any payment towards the debt restarts the clock from the date it is made.
Once the period has run out, nothing revives it. An acknowledgment or a payment after the deadline does not bring the right to sue back. In Scotland the rules differ: the five years is interrupted by a relevant acknowledgment or by a relevant claim, such as court proceedings.
The real deadline is much earlier
Six years is the legal limit, not a sensible plan. The chance of collecting falls with every month a debt sits. Contacts leave, records go missing, and businesses fail or are struck off. A debt over a year old is collected far less often than one under ninety days, which is why recovery fees rise with age everywhere in the market.
What to do now
- Keep every email in which a customer accepts what they owe. File it with the invoice.
- Record part payments against the invoices they relate to, with the date.
- Review the ledger for anything older than four years and decide now whether to act.
- Do not let a dispute run on indefinitely. Get it resolved, or get it into the formal process.