HMRC officers, also known as Enforcement Agents or Bailiffs, are authorised to visit your business premises if you fail to pay debts owed to HMRC such as VAT. HMRC may contract out to certificated bailiffs who can collect a wide range of debts. These include court fines, business rates, council tax bills, parking fines and county court judgements.
Before officers just enter, you will receive letters, to advise you to pay the debt ASAP, or else bailiffs will be used. You tend to get 7 days of notice before their first visit.
Other reasons for agents visiting you can be to serve court documents or give notices.
What are the powers of the bailiff or enforcement officer?
Officers are able to take your companies belongings and sell them, to pay off the debts and cover their fees, if you fail to pay them what they are owed.
With regards to limited companies, personal belongings cannot be taken. They only have the authority to take luxury items, which belong to the company. Any necessities are unable to be taken. Work tools and equipment worth less than £1,350 when added together, are unable to be taken. This is known as the tools of the trade exemption.
Also, anyone else’s belongings are not eligible. For example, officers will be able to take an expensive company machine, yet if it is rented or leased, they will not be able to.
If you are a sole trader or unlimited company, the power is similar, though applicable to your own personal belongings too. Any personal necessities such as household furniture, clothing and food, are non-removeable, hence unable to be seized by officers.
Partnerships see general partnership assets seized first, and then any personal belongings of each partner.
Fixed fees are required to be charged, for this process.
What rights do I have if a bailiff or enforcement officer visits my business premises?
You do not have to open your door to bailiffs or let them in. They cannot enter by forceful action, between 9pm and 6am, if only a child under 16 or vulnerable person is present or through anything other than the door.
If you do not let them in or agree payment, things outside of your premises i.e vehicles, can be taken. Additionally, you could be charged a higher fee.
You have the power to pay the debts on time and contact bailiffs to settle any issues, before enforcement is the only option. You can negotiate – if you cannot pay all at once, speak to them about other means around this. If you need advice on paying debts you cannot pay, see our page here.
Ensure you ask for a writ – this details their right to act and legitimises their right to take action. If you do not believe the enforcement officer has legal authority to be visiting you and demanding payment, contact for help ASAP.
If you are worried about bailiffs entering your home then read this article from Scottish Trust Deed.
Controlled Goods Agreement CGA (previously Walking Possession)
This is where an HMRC Officer can take control of the goods, after having sent a Notice of Enforcement and given 7 days notice. If the debt has not been paid, they can take control of the goods. Legally they cannot force their way in and can only enter through normal modes of entry.
If the goods remain on the premises, the debtor on signing the CGA also signs agreeing to allow the officer to re-enter the premises at any time to inspect or remove the goods. A vehicle can be put in store two hours after they have been secured.
Effectively if you do not reach a deal or pay in full the officer can sell the assets, giving 7 days notice. It would be a criminal offence if you, as the director, sold assets which are covered in this way.
What can I do about the HMRC officer?
- In the first instance you should check who the officer is. If he is an HMRC officer he will hold a HMRC identity card.
- Is the bill in dispute? If so, then you should contact the HMRC office demanding payment. However, it should be noted that if you do dispute the bill then you should do it in response to the warning letters that have been sent.Sometimes the amount HMRC is seeking to collect may be under appeal. In this instance the bailiff can be asked to leave.
- You could pay the money. It may be the only way to save the business. If your business if viable but just needs a bit of time then please call us on 08009700539 and we can look into trying to get the business restructured for a rescue. This could be using a CVA or administration
A word of caution. If the company's registered office is your home then that is where the bailiff will turn up! This can be stressful so it is advisable to check. They can only enter a residential property by normal modes of entry and cannot force their way in.
We are seeing more and more instances of HMRC resorting to Notice of Enforcements to collect unpaid taxes.
Categories: HMRC Time to Pay Arrangement
Worried about poor cashflow? Covid-19?, How to pay wages on pay day? For expert advice on a range of issues download our free Ultimate Guide For Worried Directors today. Or just call us on 0800 9700539
Please note that the guide was mostly written pre Covid-19 and there have been some changes to insolvency legislation that limits creditors actions and relaxes rules regarding wrongful trading. A new 20 day moratorium for distressed businesses has also been introduced.