Letter before action: the letter that decides whether you go to court

Your invoice is months overdue, the reminders have been ignored, and someone has finally said the words “take them to court”. In England and Wales there is a step the court expects first, and it is not a formality: get it wrong and a judge can penalise you on costs even if you win the case itself.

That step is the letter before action, and the single most useful thing to know about it is that there are two different regimes, and who your debtor is decides which one you are in.

Owed by a company? The 14-day track

Where the debtor is a company or an LLP, the Pre-Action Protocol for Debt Claims does not apply. What governs is the general Practice Direction on Pre-Action Conduct, and paragraph 6 keeps it simple. Your letter should give concise details of the claim: the basis on which it is made, a summary of the facts, what you want, and — for a money claim — how the amount is calculated. The other side should respond within “a reasonable time”, which the Practice Direction spells out as 14 days in a straightforward case and no more than three months in a very complex one.

An unpaid invoice with no genuine dispute is the definition of a straightforward case. Fourteen days of silence from a corporate debtor, after a compliant letter, and the road to court is open.

This is also the letter where your statutory interest and compensation belong. State the interest accrued to date, the daily rate it is growing at, and the fixed sum owed under s.5A of the Late Payment of Commercial Debts (Interest) Act 1998. A finance team reading a letter where the number grows by the day treats it differently from one where the number stands still.

Owed by an individual or sole trader? The 30-day track

The Pre-Action Protocol for Debt Claims applies, in its own words, to “any business (including sole traders and public bodies) 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”, and that final clause is the one that catches people out.

It cuts both ways. A plumber chasing a limited company is outside the protocol. The same plumber chasing the sole-trader builder who engaged them is inside it, and inside it, the Letter of Claim has a prescribed shape. Under paragraph 3.1 it should:

• state the amount of the debt, and whether interest or other charges are continuing;
• explain where the debt comes from: for an oral agreement, who made it, what was agreed and when and where; for a written one, its date, the parties, and that a copy can be requested;
• give an up-to-date statement of account, or state the interest and charges accrued since the last statement, or since the debt arose, if there were none;
• enclose the protocol’s Information Sheet and Reply Form (Annex 1) and a Financial Statement form (Annex 2).

Then you wait. If the debtor has not replied within 30 days of the date at the top of the letter, you may start proceedings — the protocol even reminds you to allow for a reply posted near the end of that window. A returned Reply Form extends matters further: 30 days from receiving it, or from providing any documents the debtor asked for, whichever is later. And where the debtor says they are seeking debt advice that cannot be obtained in time, you are expected to allow reasonable extra time.

Why the letter usually works

Here is the part the templates never mention: the letter before action is not really the prelude to court. Done properly, it is usually the end of the matter. It moves the debt from “an email they can ignore” to “a documented pre-action step with a deadline”, and it lands differently, because the recipient’s accountant, or their solicitor, tells them what ignoring it means.

It works best when it is specific. Not “we may take further action”, but the claim value, the interest to date and its daily rate, the fixed compensation, the date proceedings will be issued, and — for an individual — the protocol enclosures that show you know the rules. Vague threats read as bluff. Compliant letters read as the first page of a court bundle.

Get the sequence right

1. Identify the debtor precisely. Limited company, LLP, sole trader or individual — check Companies House, not the name on the invoice. This decides your track, your enclosures and your clock.
2. Work out the full figure first. Debt, statutory interest from the relevant date, the s.5A fixed sum. The letter should claim everything you are entitled to — you cannot negotiate up from a number you understated.
3. Send the right letter, and diarise the right deadline. 14 days for a company in a straightforward case; 30 days for an individual or sole trader, plus the protocol extensions if the Reply Form comes back.
4. Mean it. A letter before action followed by nothing teaches the debtor you are bluffing, and makes the next one worthless. Only send it when you are prepared to issue.

Jurisdiction

The Civil Procedure Rules, the Practice Direction and the Debt Claims protocol apply to proceedings in England and Wales. Scotland and Northern Ireland run different court systems with their own pre-action expectations — a Scottish sheriff court simple procedure claim is a genuinely different process, not a renamed one. The statutory interest and compensation in the letter itself, though, apply UK-wide.

This article is general information about the law of England and Wales (and, where stated, the UK), not legal advice for your situation. Almost Legal is AI drafting software grounded in UK law, not a law firm — you review and send everything it produces.