HMRC distraint actions on the rise

14 November 2011

According to figures produced by the law firm McGrigors, the number of companies whose assets have been seized for late payment of tax has risen fourfold in the last two years.   In the twelve months to April 2011 HMRC have distrained  7,004 up from 1,675 in the year to April 2009.

We are hearing of more and more instances where this is happening.  HMRC have lost their preferred creditor status so are ranked at the same level as trade creditors.  In effect they are unsecured creditors.  However, as any debt to HMRC is regarded as not in dispute they have other powers to collect their debt.  They can take possession of goods under a distraint notice without needing to go to court.

HMRC have said that they do not use this power where there are historical debts and the company is otherwise viable.

In any distraint action the bailiff cannot take "tools of the trade" as this would mean that the business is irrecoverably damaged.

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.