BUSINESSES owed thousands of pounds are being put off from claiming it back due to legal changes that stop people being able to recoup their costs, according to a Worcester solicitor.

In April this year, the limit for using the Small Claims Court was doubled from £5,000 to £10,000.

But while this meant creditors who are owed money up to £10,000 were able to use the quicker and, in theory, cheaper route of going through the County Court to sue and recover their debts, creditors are being put off by the Small Claims Court general rule that says they cannot recover their legal costs from the other party, even if they win.

They are stuck with fixed costs only.

Sam Pedley, associate solicitor at Worcester law firm mfg Solicitors, said that creditors could be missing out on vital support that would make sure they get what they are owed.

He said there are ways to recover the costs associated with pursuing debts through the Small Claims Court.

”A businesses’ ability to have its debt claims handled professionally by a qualified solicitor has now been threatened by the doubling of the small claims track limit,” said Mr Pedley.

“Creditors see the rules banning them from claiming back their legal costs and are put off instructing a solicitor. That means their chances of winning are greatly reduced because they miss out on the chance to get their claim right.

“There is, however, room to offset some legal costs from the other party in the form of compensation through the Late Payment of Commercial Debts (Interest) Act 1998.

“This law allows, in most business to business contracts, for businesses to claim a fixed compensation entitlement on an invoice by invoice basis according to the size of the overdue debt, and interest at eight per cent above the Bank of England base rate.

“The whole point of the Small Claims Court is to make it easier for justice to be done. People should not be put off claiming what they’re rightfully owed by their debtors or from being professionally represented.”