Is an application for payment the same as an invoice?
No: your application claims the sum you say is due and the notices answer it, while an invoice usually bills a sum already agreed.
Updated: . By Jack Butler-Kettle, Construction Claims Consultant.
The answer
An application for payment is the document your subcontract asks you to send each cycle. It states the sum you consider due and how you worked it out. Your main contractor then answers it with a Payment Notice, or with a Pay Less Notice if it plans to pay less. Where no Payment Notice arrives, section 110B of the Housing Grants, Construction and Regeneration Act 1996 can make your application the notified sum. That is the sum your main contractor must pay unless a valid Pay Less Notice follows. It only works if your application was valid and sent on time. An invoice is different. Many subcontracts ask for one after the Payment Notice, for the sum that notice fixed. So it bills an agreed figure rather than claiming one. It is also the tax document, showing the VAT or reverse charge and any CIS deduction. The risk comes when you send only invoices. An invoice can sometimes count as your application, if it states the sum due and how you worked it out. It must also reach the right person on the right date. Many invoices do neither, and then there may be no application for a missed notice to turn into the sum due. So send a proper application every cycle, in the form and on the date your subcontract sets. Send the invoice when your subcontract asks for it. If it is disputed whether a document you sent counts as an application, ask your solicitor.
Example
Illustrative example. The scenario and figures are invented.
The facts
A drylining subcontractor sends an invoice for £42,000 each month instead of an application. One month no Payment Notice arrives, and only £30,000 is paid on the final date for payment.
What happens
- The subcontract is checked. It asks for a monthly application stating the sum due and how it was worked out, sent to the named quantity surveyor by the 25th.
- The invoice gave a total with no build-up, and went to the accounts team on the 28th.
- So it may not count as the application, and the £42,000 may not be the notified sum. The £12,000 gap becomes an argument about value instead.
- From the next month, a proper application goes to the named quantity surveyor by the 25th, and the invoice follows the Payment Notice.
The month in figures
| Item | Amount |
|---|---|
| Invoice sent instead of an application | £42,000 |
| Paid on the final date for payment | £30,000 |
| Gap left as an argument about value | £12,000 |
The outcome
Two months later the Payment Notice is missed again, but this time a valid application is on file. Its sum stands as the notified sum and is paid on the final date.
Our Underpayment Prevention sets your applications to each subcontract's form, recipients and dates.