If you're a microbusiness, your supplier can't bill you for gas or electricity used more than 12 months before the bill. That's an Ofgem licence rule. The main exception is if you stopped the supplier billing accurately, for example by blocking access to the meter. Larger businesses aren't covered by the rule.
This is general information, not legal or financial advice.
What is a back-bill?
A back-bill (or catch-up bill) is a bill for energy you used in the past but weren't charged for properly at the time. Ofgem says estimated billing causes many of them; meter problems and billing errors cause others. The supplier works out what you really used and sends one bill for the difference.
For a business on estimated reads for a long time, the gap can be large. That's why the 12-month limit matters.
What does the 12-month rule actually say?
Ofgem announced the ban on 5 March 2018. It applies to suppliers' domestic customers and to microbusinesses. For microbusinesses it started in November 2018, six months after the domestic rule.
The rule sits in the supply licence (standard condition 21BA). When a supplier takes "charge recovery action" (sends a bill or asks for payment), it can only charge for:
- units that could reasonably have been used in the 12 months before that bill, and
- standing charges and other supply charges built up in those same 12 months.
Ofgem says the rule applies to every payment method, meter type and meter arrangement. That includes prepayment, smart meters and accounts on Direct Debit.
An example of how it works: if a supplier sends a catch-up bill dated 14 October 2026 that covers usage from January 2025, it can only charge for energy used from 14 October 2025 onwards. The rest is written off, unless an exception applies.
Suppliers also have to put these protections into their contract terms and must not enforce any term that conflicts with them.
Who counts as a microbusiness?
You're a microbusiness for energy purposes if you meet any one of these tests (as listed by the Energy Ombudsman):
- fewer than 10 employees (or full-time equivalent) and yearly turnover or balance sheet of no more than £2 million, or
- you use no more than 100,000 kWh of electricity a year, or
- you use no more than 293,000 kWh of gas a year.
You can qualify for one fuel and not the other. Our guide to microbusiness energy rights explains the tests in more detail.
When can a supplier go back further than 12 months?
Only in limited cases. The licence lets a supplier bill beyond 12 months where it couldn't bill accurately because of the customer's "obstructive or manifestly unreasonable behaviour". Ofgem's examples:
- stealing gas or electricity, or tampering with the meter
- stopping the supplier getting physical access to the meter after reasonable requests
- not keeping a meter you own in working order
The fault has to be yours. Ofgem says suppliers must judge each case on its facts and keep evidence.
Two other situations aren't covered by the limit:
- Old bills you were already sent correctly. If a supplier properly billed you within the 12 months and you didn't pay, it can keep chasing that debt and agree a payment plan.
- Bills issued before the rule started. These are now well in the past for most businesses.
What doesn't count as your fault?
This is where many disputes start. Ofgem has been clear that these do not take away your protection:
- not sending meter readings
- not noticing that your bills were estimated
- not spotting that your Direct Debit was too low
- a mistake by the supplier or a third party, such as a meter operator
In its December 2020 letter, Ofgem said "a failure from a customer to provide a meter reading will not absolve the supplier from the backbilling limit". It also said customers "must not be held responsible for failing to identify errors in their billing".
The same letter listed cases where suppliers had wrongly refused to apply the rule. These included estimated bills, prepayment customers, Direct Debits set too low, and billing problems caused by metering or smart meter set-ups.
What if you're not a microbusiness?
The 12-month licence rule doesn't apply to larger non-domestic customers. Your protection then depends on your contract terms, so check the billing and back-billing clauses before you sign or renew.
Two newer rules may still help. Since 1 July 2024, Ofgem's Standards of Conduct (the duty to treat customers fairly) cover businesses of every size. And small businesses can now use the Energy Ombudsman if a complaint isn't resolved.
The Energy Ombudsman's small-business test is: fewer than 50 employees and turnover of no more than £6.5 million or a balance sheet of no more than £5 million, or electricity use of no more than 200,000 kWh a year, or gas use of no more than 500,000 kWh a year.
Does the rule work in your favour too?
Yes. The licence condition doesn't stop a supplier refunding you for overcharging that goes back more than 12 months. If your meter was over-read or you were billed on the wrong tariff for years, ask for the whole period to be corrected.
How do you challenge a back-bill?
- Check the dates. Find the bill date and the earliest date the charges cover. If it's more than 12 months, mark the older period.
- Check your size. Confirm you meet one of the microbusiness tests above for that fuel.
- Write to the supplier. Say you're a microbusiness, quote the 12-month back-billing rule (standard licence condition 21BA), and ask for the charges older than 12 months to be removed. Keep a copy.
- Ask for evidence. If the supplier says you were obstructive, ask what requests it made for meter access, when, and how.
- Escalate if needed. If it isn't fixed within 8 weeks, or you get a deadlock (final response) letter sooner, you can take it to the Energy Ombudsman for free.
Our step-by-step guide to a business energy bill dispute covers the complaint process in more detail.
How do you stop it happening in the first place?
The surest way is to make sure bills use real readings:
- send readings regularly, even though not sending them doesn't remove your protection
- check each bill says "actual" rather than "estimated" (our guide to reading a business energy bill shows where)
- if your bills stay estimated for months, ask the supplier why in writing
If you're also checking whether your rates are fair, the estimator gives a rough guide to what a business like yours might pay.
What to do next
- Find the dates covered by any catch-up bill you've received
- Check whether you meet a microbusiness test for that fuel
- If the bill goes back more than 12 months, write to the supplier quoting the rule
- Ask for evidence if the supplier says you blocked access to the meter
- Ask for refunds of any overcharging, however old
- Take it to the Energy Ombudsman after 8 weeks or a deadlock letter
- If you're a larger business, check the back-billing clause in your contract before renewing