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Reviewed by
Chris Andersen
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Reviewed by Chris Andersen

Chris became an Insolvency Practitioner in 2014 and is currently regulated by the IPA.

He is experienced in contentious insolvency with excellent analytical skills and strong knowledge of both general and technical insolvency matters.

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22nd April 2024

Understanding HMRC Enforcement Actions

Her Majesty’s Revenue and Customs (HMRC) is responsible for ensuring tax compliance and collecting debts related to tax arrears in the United Kingdom. Enforcement officers and bailiffs are instrumental in executing this mandate, particularly when businesses fail to meet their tax obligations voluntarily.

When Can HMRC Bailiffs Visit Your Business?

HMRC bailiffs have the authority to visit business premises under specific conditions. This usually occurs after a Notice of Enforcement has been issued, giving the business owner seven days’ notice. The powers to enter premises are granted under the Taking Control of Goods Regulations 2013, which allows enforcement agents to enter a property to seize goods if court permission has been obtained.

HMRC Enforcement Officers VS Bailiffs

While both roles aim to recover unpaid taxes, an HMRC enforcement officer is an employee of HMRC and has different legal powers compared to a bailiff, who may be a third-party contractor. Knowing the distinction can help business owners understand their rights and the appropriate actions to take during an enforcement visit.

HMRC Bailiffs - What Are the Rights and Powers of Enforcement Officers?

What Powers Do HMRC Bailiffs Have?

Conditions Under Which HMRC Bailiffs Can Force Entry

HMRC bailiffs can force entry into commercial premises only when they have obtained authorisation from a Justice of the Peace. This is generally reserved for cases where previous attempts to collect the debt have failed, and it is clear that the business has assets that could settle the debt.

Overview of Goods HMRC Bailiffs Can Legally Seize

Under the Controlled Goods Agreement, HMRC bailiffs can seize items that are owned outright by the business, including office equipment, vehicles, and inventory. However, goods that are leased, rented, or under hire purchase agreements are not eligible for seizure.

Your Rights Against HMRC Bailiff Actions

How to Identify Lawful HMRC Bailiff Activity

Every HMRC bailiff must carry an identity card and a letter of authorization from HMRC. Business owners should request to see these upon the bailiff’s arrival to verify their credentials. This is important to ensure that the actions taken are lawful and within the scope of granted authority.

Steps to Take if Unlawful Seizure Occurs

If you believe that an HMRC bailiff has seized goods unlawfully, you should immediately contact HMRC to dispute the action. Documentation proving the ownership and status of the goods can aid your case. Legal advice may also be sought to ensure proper representation and to protect your business’s interests.

Preparing Your Business for HMRC Enforcement

Essential Documentation and Preparation Tips

Keeping detailed records of all business assets and their ownership status can prove invaluable during an enforcement visit. This includes receipts, contracts, and finance agreements.

When to Consider Professional Insolvency Advice

If your business is at risk of enforcement action, consulting with insolvency practitioners can provide ways to manage your liabilities and possibly avoid severe penalties such as liquidation or bankruptcy.

Contacting an Insolvency Practitioner for Help

How Insolvency Practitioners Can Assist During HMRC Actions

Insolvency practitioners can offer crucial advice and services, from negotiating with HMRC on your behalf to arranging formal insolvency procedures if necessary.

Free Resources and Advice for Business Owners

For further information, consider reaching out to advisory services or professional bodies that specialize in tax disputes and insolvency issues.

By familiarizing yourself with HMRC’s enforcement processes and your legal rights, you can better prepare to handle potential visits from bailiffs and protect your business’s assets effectively. Understanding these guidelines ensures that you can navigate the complexities of tax enforcement with confidence.

FAQs

If you receive a Notice of Enforcement from HMRC, it’s important to act quickly. Review the notice to understand the debt amount and the deadline by which you must pay. If you can, pay the debt in full to avoid further action. If payment in full is not possible, contact HMRC immediately to discuss possible payment arrangements or seek advice from a financial advisor or insolvency practitioner.

HMRC bailiffs are generally required to visit during reasonable hours, typically defined as 6am to 9pm. If a bailiff visits outside these hours without a justified reason, they may be in violation of their conduct rules. You can refuse entry and should report the incident to HMRC’s complaint department.

To prevent HMRC bailiffs from seizing personal assets, ensure that personal and business assets are clearly separated and properly documented. Keep invoices and proof of ownership that clearly show which assets are personal. Inform the bailiffs of these distinctions during their visit. Personal assets should not be kept on business premises if possible.

If you cannot pay your tax debt before the HMRC visit, contact HMRC to negotiate a payment plan. This may involve setting up an installment agreement that allows you to pay the debt over time. Alternatively, seeking advice from a financial advisor or insolvency practitioner can provide other strategies to manage the debt.

No, HMRC bailiffs cannot legally seize goods that do not belong to the business. This includes items that are leased, hired, or owned by other individuals. If there is a risk of incorrect seizure, provide proof of ownership or rental agreements to the bailiffs during their visit.

A Controlled Goods Agreement is a legal document that an HMRC bailiff may use to take control of goods while leaving them in the possession of the debtor. It lists the items that may be seized if the debt is not paid within an agreed period, typically seven days. Signing this document prevents the immediate removal of these goods but allows their seizure if the agreement’s terms are not met.

After goods are seized, HMRC typically sells them at public auction within a few weeks to a few months, depending on the nature of the goods and the logistical arrangements. The proceeds are used to cover the outstanding tax debt, with any surplus returned to the business or individual.

If you disagree with the valuation of seized goods, you can challenge the appraisal by providing evidence of the items’ higher value, such as recent purchase receipts or independent valuations. You should contact HMRC directly to discuss the valuation and submit your evidence.

HMRC bailiffs can access locked areas within business premises if they have legal authorization and believe that assets covering the debt are stored there. They are allowed to use reasonable force to enter these areas if necessary. Always ensure that any entry is legally justified and documented.

Obstructing an HMRC bailiff can lead to serious legal consequences, including additional fines or charges. If you obstruct a bailiff without a lawful reason, you may be found in contempt of court. It is essential to cooperate with HMRC bailiffs while asserting your rights within legal boundaries.