Published: 3rd January 2020
Updated: 12th February 2021
Repeated failure to meet your tax obligations could lead to HMRC taking action against your business. If you have been served a notice of enforcement, HMRC bailiffs or HMRC enforcement officers will be able to enter your property to recover unpaid debts, so it is important to understand your rights.
When served with an Enforcement Notice by HMRC Enforcement Officers, it is important to understand your rights. Once the Notice has been served you have a choice of paying the debt in full, or negotiating a Time to Pay arrangement which, although it does not reduce the amount owed, gives you more time to pay.
Ignoring the Enforcement Notice, or taking too long to act, will see Enforcement Officers or HMRC bailiffs at your door, so this is not something you can afford to ignore.
To add to a confusing situation, the distinction between HMRC Enforcement Officers and HMRC bailiffs can be unclear. HMRC do not actually employ bailiffs: they hire the services of bailiff companies to enforce payment of a debt and, as such, you may feel that these have more rights of entry and seizure of goods than is actually the case.
There is a further distinction between bailiffs and High Court Enforcement Officers (HCEO). An HCEO works according to a Writ of Control which empowers them to recover debts of £5,000 or more, whereas a bailiff can collect debts below this amount.
Failing to pay the amount due will result in HMRC Enforcement Officers or bailiffs arriving at your premises to recover goods to the value of the debt under a Controlled Goods Agreement. Obtaining accurate information about the situation you are in is vital.
It is important at this stage to engage the services of a qualified Insolvency Practitioner in order to obtain the best advice, and understand how to proceed.
Begbies Traynor can help to steer your company out of a challenging state of affairs, both practically in terms of dealing with HMRC, and financially in order to rescue the business from liquidation.
In order to establish the rights they hold, you should find out exactly who has visited your premises – is it a field officer from HMRC? If so, they will carry an identity card. HMRC Enforcement Officers have the right to force entry into premises which are solely commercial, but only if they have been authorised by a Justice of the Peace.
If the premises are part or fully residential, their entry rights are limited to the normal routes, and the times at which they can gain entry may also be limited depending on the type of debt they are collecting and whether children are resident in the property.
Once entry has been gained, they will discuss the debt in question and serve you with the Enforcement Notice. The full amount must be paid within seven days of receipt of the Notice (excluding Sundays and Bank Holidays). As mentioned earlier, you may be successful in negotiating a Time to Pay instalment plan as an alternative to paying in full, in which case action to remove goods will cease as long as you adhere to the new arrangements.
It is worth bearing in mind that an Enforcement Notice may not necessarily be delivered in person. HMRC may send it through the post, via fax or email – it may even be attached to the outside of your building if you were out when the officer arrived.
After seven days has elapsed, they will return to list the goods to be seized. This list forms part of a Controlled Goods Agreement, which you will be asked to sign. If you sign it, a further seven day period is offered in which to pay the debt. If you refuse to sign the agreement, the Enforcement Officer or bailiff may arrange for the immediate seizure of goods.
Signing the Controlled Goods Agreement also signifies your agreement to goods being inspected or taken at any time. Directors have no right to sell any of the goods included in the Agreement. To do so would constitute a criminal offence, and would significantly worsen your overall situation.
HMRC Enforcement Officers have authority to seize sufficient goods to cover not only the debt, but also the cost of enforcement. Goods are sold at public auction and do not always reach the value hoped for. This is why it may appear that Enforcement Officers are taking an excessive number of assets from your business. It is to cover a potential shortfall in the price achieved at auction, and also the fees in relation to the enforcement process.
HMRC regularly use Enforcement Notices to collect monies owed. They do not need to go through the courts to undertake this action, but they have been known to target the wrong business or make other administrative errors, hence the need to carefully check the notice as soon as it is served.
Begbies Traynor can help companies negotiate with HMRC, and advise on the best course of action. If you have received an Enforcement Notice, call any of our offices around the UK for a free same-day consultation.