Court clarifies construction payment rules as non-compliant provisions trigger default scheme

The Technology and Construction Court has delivered a sharp reminder about payment compliance. A case involving retailer Lidl found that construction contracts calculating final payment dates by reference to VAT invoice submission breach the Housing Grants, Construction and Regeneration Act 1996. When payment provisions fail compliance tests, they're automatically replaced by the Scheme for Construction Contracts, creating a standard 17-day payment window from due date. This judicial intervention could trigger widespread contract reviews across the supply chain. The decision follows earlier TCC precedent and may fuel a resurgence of 'smash and grab' claims where contractors exploit non-compliant payment terms to accelerate cash flow.

[Source](https://www.pinsentmasons.com/out-law/news/construction-contract-payment-provisions-compliant)