When is a Controlled Goods Agreement used?
When you cannot pay creditors debts, bailiffs (enforcement officers) get involved. A Controlled Goods Agreement (CGA, also known as a Walking Possession Agreement) secures the debtors goods to the debt, when the bailiffs demand immediate payment and you cannot do so. HMRC are the most common users of this particular method of debt collection.
When you cannot pay your debt, the bailiff will come to your registered office or home and first, take a look at all of the assets inside and make a list of ‘inventories’. This is a list of items they believe to add up to the value of the debt you need to pay. A detailed record will be made of these, with specific and accurate descriptions.
Can any asset be listed as an inventory?
No. There are limits. Not all assets are able to become a part of the list. The following are excluded;
- Any safety equipment
- Any livestock, crop or consumables
- Items that are unable to be removed without damage being caused
- Tools and equipment which the business uses for trade
- Items that are on lease, HP, or rent, which do not belong to the company wholly
- Goods that belong to yourself and not the company (unless subject to personal guarantee)
You should ensure that the list includes only assets your company owns, and ensure it matches up to the same value as the debt. If you believe the bailiff is taking too many items, or they do not match the correct value, you should say so immediately.
What happens after I have signed the controls goods agreement?
After the list of inventories has been created, a regular payment plan is to be made. This is a measure of repayment to the creditor. They will want the amount to be repaid as soon as possible, however it should be a plan for the amount to be repaid over time with regular (weekly or monthly) instalments. You have the choice of how much to pay, so it is worth reviewing your finances and other costs, to see how much you can be sure to commit to. It is highly important to choose an amount that is viable and achievable.
After the repayment plan has been made, it should all be documented in a CGA, which outlines the:
- Debtors name and address
- Reference number and date of the agreement
- Name of all persons entering the agreement
- Contact details for the EA and their contact hours
- Detailed inventories list
- Terms of the payment plan agreed between the EA and the debtor
The enforcement agent (EA) should sign the CGA, along with the debtor (if not the debtor then a person the debtor has authorised or the person in apparent authority).
Once the CGA has been signed, if the agreements are breached, the EA has every right to reinspect. If you fail these payments, the bailiff can re-visit and take some of the goods of the inventory list. These goods will then either be kept in storage by the bailiff until you can repay, or it will be immediately sold to cover the instalment you failed paying.
It should be noted that if you do not sign the CGA, the EA can remove and sell any of the goods from the inventories list immediately. It is also illegal for you to interfere with any ‘controlled goods’ (those on the inventory list). Therefore, you cannot sell any of those goods, during the process, once the CGA is signed.
If you need any help with CGA, dealing with bailiffs or other ways of paying debts, please contact us on 0800 970 0539 today.