Can a company charge £25 each month plus interest for late payment? The annual invoice, for a maintenance agreement, was originally £62.46. 

Even if a contract was entered into which specified these terms, you could challenge this rate of interest on the basis of it being an unreasonable term under the Unfair Contracts Terms Act 1977.

A requirement to pay unreasonable interest on an overdue payment is likely to be regarded as an unfair penalty.

If an interest clause is held to be a penalty, it is unenforceable, However, the supplier could still charge statutory interest for b2b contracts at a simple rate of 8% above the Bank of England's official Bank Rate. 

I would write to the supplier saying that the interest rate is unreasonable under the Unfair Contracts Terms Act 1977, is likely to be a penalty and that on this basis, you won’t be paying the interest at this rate. 

Note that they could require you to pay interest at 8% above the base rate.

In the following cases, the issue of whether an interest rate was too high or not was ruled on as shown below:



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