It comes as no surprise to me that the voluntary code that requires large companies not to endanger small businesses and thereby the wider economy by getting them to pay their suppliers on time, has failed.
See this BBC article for details.
How about legislation where small businesses are legally obliged to list all invoices to companies over a certain size, which exceed or have exceeded payment terms in that VAT quarter on their VAT return?
HMRC should then instantly issue a punitive penalty charge, payable immediately (as for VAT fines) against the large company – maybe say 50% of the total invoices paid late.
HMRC would keep 50% of the fine for the treasury and immediately pass the other 50% to the small business involved.
Making it a statutory obligation on small businesses avoids any bullying of the small company by the large company.
To protect against genuinely disputed items a statutory form should be lodged by the large company – if the dispute is subsequently found to be petty or unreasonable the fine should be doubled immediately.
That might have an effect on the companies who, like tax avoidance, try to use other people’s money to generate profit for themselves.