Amendments to the Building and Construction Industry Security of Payment Act 1999
From 28 February 2011, if a subcontractor applies for adjudication under the Building and Construction Industry Security of Payment Act 1999, they are also able to issue a payment withholding request to a principal contractor. As a result of that notification, the principal contractor is required to retain the amount of the claim from any money owed to the respondent (the contractor the payment claim has been made against).
These amendments will apply to any adjudication proceedings that are pending or commence after 28 February 2011. They will not apply to proceedings where an adjudication determination has already been made.
If you are a principal contractor (as defined in the amendments) you will need to make sure you (if you are a sole trader or partnership) or your company acts on any payment withholding requests that are received.
This means that you must retain unpaid money to the value of the adjudication application until one of the following occurs:
- The adjudication application for the payment is withdrawn;
- The respondent makes payment to the claimant under the payment claim;
- The claimant serves a notice of claim on the principal contractor under the Contractors Debts Act 1997
- A period of 20 business days elapses after a copy of the adjudication determination is served on the principal contractor by the claimant.
If you do not owe any money to the respondent, you are not required to retain the amount claimed in the payment withholding request. However you must notify the claimant of that fact within 10 business days of receiving the request.
There are penalties for principal contractors if they do not comply with these requirements.
If you are a respondent you may be required to provide information about the principal contractor to the adjudicator, to assist the claimant in identifying who and where the payment withholding request should be served upon. There are penalties for respondents if they fail to provide this information when requested by an adjudicator.
If you are a subcontractor and you wish to serve a payment withholding request on a principal contractor, you will need to fill out the Payment Withholding Request form and a statutory declaration confirming that you genuinely believe that the amount of money claimed is owed by the respondent.
You are then responsible for sending these forms and a copy of the adjudication application to the principal contractor. Once the adjudication determination has been made you are also responsible for providing a copy of the determination to the principal contractor within 5 business days.
If you withdraw your adjudication application you must advise the principal contractor within 5 business days.