When do you issue a Pay Less Notice?

Whenever you mean to pay less than the Notified Sum currently standing, the amount that legally must be paid at that point. Three situations cover most cases: you disagree with the Notified Sum, new deductions arose after your Payment Notice, such as a contra charge, a cost charged back for putting right defective work, or you missed the 5 day window and the payee's application is on course to become the Notified Sum by default. A Pay Less Notice lets you pay the smaller figure lawfully. If you agree the sum and mean to pay in full, you need none, and a Payment Notice that already reduces the application stands on its own. Simply intending to pay less, without a valid notice, does not shrink what you owe; it leaves the full sum enforceable against you.

A contractor faces three months on a housing scheme. In March it disagrees with a bricklayer's £60,000 application, so it serves a Pay Less Notice for £52,000. In April a contra charge lands after its Payment Notice went out, £5,000 to hire scaffolding the bricklayer should have provided, so it serves a Pay Less Notice for that. In May its own Payment Notice slips past the 5 day window, so the £60,000 application is heading to become the Notified Sum, and a Pay Less Notice is the only way to bring it down. In a quiet month it agrees the figure and just pays. What it must never do is quietly pay less with no notice, because the unpaid balance would still be legally owed.