Can you issue a negative Payment Notice?

No. A Payment Notice, the payer's statement of the sum it thinks is due, cannot force the payee to send money back. The valuation, the exercise of pricing the work done so far, can come out below zero, for example where the payer has already paid more than the work is now worth, and the notice should show that full calculation, but the sum stated as due for the round is then zero. The payment rules in the Construction Act only run one way: they make sums payable to the payee, not a debt back to the payer. Any overpayment is recovered another way: through later rounds as the running valuation catches up, through an express repayment term, through adjudication, the fast statutory dispute process, or at the final account. The same applies to a Pay Less Notice, the notice that cuts a payment down: its calculation can go negative, but the sum it fixes cannot drop below zero.

A cladding contractor is paid generously early on, then made to strip out a defective panel run. This month the surveyor prices the work and finds the account £12,000 ahead of itself: the true valuation is minus £12,000. The Payment Notice should show that arithmetic, but the sum it states as due for the round is zero, not a demand for £12,000 back. The payer recovers the overpayment as later valuations catch up, or relies on a repayment term or adjudication. The negative figure is worth recording, but the notice cannot reach into the contractor's account.