What is a HMRC Distraint Notice (now Notice of Enforcement)?A Notice of Enforcement is where Her Majesty's Revenue and Customs (HMRC) has lost patience with the debtor (that's your business) and is now seeking to recover the debt. It may have tried normal collection steps and these have failed you may have offered a time to pay deal that has not worked. An HMRC officer is an Enforcement Agent for the purposes of the Act.
The procedure is as follows:
The officer is issued with a Writ of Control. They will then send the Notice of Enforcement to the debtor, on 7 clear days’ notice, excluding Sundays and bank holidays.
This notice period gives you (the debtor) an opportunity to contact HMRC and either pay in full or request/negotiate payment by instalments or better still contact KSA to sort it out for them!!
If payment in full is not made within this 7 clear day period or an instalment arrangement agreed, the officer will attend the debtor’s premises after the expiry of the 7 clear day notice period to take control of goods (formally called seizure). If the debtor doesn't sign a Controlled Goods Agreement (formerly Walking Possession) or makes payment in full, the officer can make arrangements to remove goods and sell the goods over which he has taken control (seized).
If a proposal for payment by instalment is accepted at this visit, a Controlled Goods Agreement (CGA) will be prepared. It should include, amongst other matters, a list of the items over which control has been taken. The agreement must be signed (this replaces walking possession).
If the CGA is not adhered to, the HMRC officer will re-visit, on 2 days’ notice being given (again a breathing space to make payment or seek advice from KSA.) If payment is still not made then the goods noted in the CGA will be removed and sold.
The sale process takes place again with notice being given to the debtor. Throughout this process, set fees are charged. This applies to HMRC as well as an EA.
Note that the officer can only enter the premises by the normal mode of entry e.g door if half the property is residential. They now CANNOT climb in a window for example. If it is entirely commercial, they can force entry.
They are now permitted to force entry, to commercial, even on their first visit. They cannot force entry to dual purpose premises unless having part of the premises as residential is against the terms of the lease.
What happens after goods have been removed?
If the debt is not paid then the HMRC officer can sell the goods. The debtor must be given 7 days’ notice of the sale (although permission can be sought from the court for an early sale of the goods if they would be wasted or devalued during the 7 day period). You still have time to contact KSA for help!
Note that a notice of liquidation or a notice of intention to appoint can halt proceedings and can stop goods being removed.
If this happens your business can just stop dead. So the best thing to do is keep trying to do a deal to repay the tax. If you cannot get a deal, ask KSA to help you and we can often persuade HMRC to take a longer term view. If that doesn't work then a company voluntary arrangement is the next best option.
If the asset have been removed and you cannot afford to pay the debts, then we can liquidate the company for you quickly and safely.
Above all, don't bury your head in the sand get talking to HMRC quickly and honestly.
For more information on distraint
HMRC Notice of Enforcement
Can I stop a bailiff visiting my business
Can I stop bailiffs coming to my business?
Can't pay corporation tax
Compliance tax and VAT
HMRC and the CVA process
HMRC getting tough on overdue tax
HMRC Notice Warning of Enforcement by Distraint | Can I stop distraint and the bailiff?
HMRC Payment Problems - Worried Directors Guide
Corporation tax issues
Penalties for late payment of PAYE and NIC
Real Time Information - RTI
Refused a time to pay deal with HMRC
Time to pay arrangement - worried director's guide
Voluntary Arrangement Service and CVA
What are PAYE security deposits?
What is walking possession (Taking control of goods)?