Their Payment Notice is wrong and the final date is days away
Their Payment Notice values our work well below the application, and the final date for payment is close.
Updated: . By Jack Butler-Kettle, Construction Claims Consultant.
If the notice was late or never came, see what to do when no Payment Notice or Pay Less Notice came.
What's happening?
A Payment Notice is the notice your main contractor sends after your application, saying what it thinks is due and how it worked that out. Under section 110A of the Housing Grants, Construction and Regeneration Act 1996, a valid notice fixes the notified sum, even when it undervalues your work. It is valid if it was sent in time, by the right person, and states the sum and how it was calculated.
Emailing to say the notice is wrong does not change that. The Act gives you no counter-notice to send. So there are two questions. Was the notice valid and in time? If not, your application may stand as the notified sum. Is its valuation right? If not, you argue that in your next application or, where the sum justifies it, in an adjudication on the true value.
Both questions need the same papers: your application as sent, the notice with the record of when it arrived, the contract dates and your measure. Get them together before the final date for payment. After that date the lower figure has been paid, and the difference waits for the next cycle at the earliest.
The solution
Check the notice first: who sent it, when it arrived against the window, the sum it states and whether it shows how that sum was worked out. If it fails on any of those, your application may stand as the sum due. If it passes, the argument is about the figures, line by line.
Underpayment Claim makes that check the same day where the final date is close. We then value each difference line by line. The undervalued items go into your next application with evidence or, where justified, to an adjudication on the true value. Underpayment Prevention makes the notice check part of your team's routine on every cycle.
Example
Illustrative example. The scenario and figures are invented.
The facts
A drylining subcontractor applies for £58,000. Its main contractor's Payment Notice arrives on day 4 of a 5-day window and states £36,000. A £14,000 variation is shown at nil and £8,000 is taken off two measured items. The final date for payment is 9 days away.
What happens
- The notice is checked first. It came from the commercial manager the subcontract names, inside the window, and states a sum and a calculation. So £36,000 is the notified sum for this cycle.
- The two measured items are remeasured against the drawings and the dated photographs. These support £6,500 of the £8,000 taken off.
- The variation is traced to a site instruction the subcontractor confirmed in writing the same week. The main contractor's surveyor had not seen it.
- Both go into the next application with the remeasure, the photographs and the written confirmation attached. The £36,000 is paid on the final date.
The notice in figures
| Item | Amount |
|---|---|
| Application | £58,000 |
| Payment Notice | £36,000 |
| Variation shown at nil | £14,000 |
| Taken off two measured items | £8,000 |
| Recovered in the next cycle | £20,500 |
The outcome
The next Payment Notice includes the variation at £14,000 and £6,500 of the measured items. That is £20,500 of the £22,000 difference, recovered a month later without a dispute.