We owe HMRC and they have threatened distraint.  What can we do?

Distraint by HMRC

HMRC has the power to take your business assets and sell them at auction in settlement of an unpaid tax bill.  This process is called “Distraint”.

Who can distrain? 

Any creditor has the power to do this if they obtain a court order.  However, HMRC or Landlords do not need a court order as they have ancient rights to collect their debts.

If you owe taxes,   the first step in the process is usually a visit by an HMRC “field officer” who is usually based locally and whose initial purpose is to check the address and make contact.  After that they may enforce the debt by taking “walking possession” of any goods such as stock or equipment.

Walking Possession

This is where an HMRC Officer or a bailiff (for the County Court) or Sheriff (for the High Court) has visited your premises and obtained entry under a distraint notice. He /she has asked for payment of the proven debt. If you have not paid this plus the court and his costs he can "take possession" of the goods, equipment, fixtures, stock etc on the premises.  Legally they cannot force their way in but can enter via an open window for instance.  So the practicalities are such that it will be difficult to keep them out. 

Effectively if you do not reach a deal or pay in full the field officer or their agents can remove and sell the assets in 5 days. To sell the assets, after they are covered in this way is a criminal offence. If the bailiff has obtained a walking possession he can force entry to recover the goods after the 5 day period.   However, it should be noted that the agent cannot distrain on "tools of the trade" as otherwise the business is damaged irrecoverably.

Threats of distraint or legally taking possession of goods should not be ignored. KSA Group is witnessing a sharp increase in the number of distraint actions against our callers, coupled with growing numbers of winding up petitions being issued by HMRC, the intent of HMRC is clear – if directors don’t act HMRC will

If you do not agree that you owe the tax demanded, you should tell the HMRC officer, but you will find that he/she is in a non-negotiable position once he/she is on the premises.

So, if you have a distraint threat or have been visited by an HMRC officer or Bailiff , then you must ACT.  In the event that the business is not viable going forward call us and we can put the company into liquidation quickly and lower the risk of personal liability. 

Alternatively,  if the you feel you can pay the debt and have a viable business but need more time to put a rescue plan together then we can help.  Perhaps a company voluntary arrangement can be used where you agree to pay off a proportion of the debt over a period of 3-5 years.   There are other options such as administration.  Give us a call and we will take you through ALL the options free of charge and with a friendly attitude.