Handling Bailiffs for Limited Company Debts: Help & Advice

If a limited company in the UK fails to pay its debts, it may face a visit from bailiffs. Bailiffs are legally authorised to seize certain assets from the company for debts like business rates, CCJs, high court judgements, court fines, HMRC arrears, and business rent.

This can be a stressful situation for business owners, but it is important to understand what bailiffs are allowed to do and what they are not.

You should be aware there is a difference between a bailiff (not an HMRC employee) and an enforcement officer (employee of HMRC). In both cases, you should ask to see the ID of the person visiting your premises and note these details.

What are Bailiffs’ Powers with Limited Companies in Debt?

Bailiffs operate under specific legal powers and restrictions. They are authorised to enter business premises to seize assets, but strict rules govern this process.

• Right of Entry: Bailiffs can enter a company’s premises to collect debts. However, they usually need a court order and can only enter through normal means, such as through a door. Forced entry is generally not permitted on the first visit.
• Seizing Assets: They are permitted to seize company assets to recover the debt amount. Personal assets of directors or employees are not subject to seizure for company debts.
• Notice Requirement: Bailiffs must provide notice of their intention to visit the premises via a Baliff Enforcement Notice. This notice provides seven days’ warning, allowing you time to either settle the debt or make arrangements to do so, thereby preventing the bailiff’s visit and the potential seizure of assets.
• Business Hours: Visits are typically conducted during normal business hours to minimise disruption and ensure the presence of company representatives.

What Can Bailiffs Take From a Business?

For a limited company, a bailiff can only take assets that belong to the business, such as office equipment, company vehicles, and company-owned stock. They cannot seize the personal assets of the directors or employees.

Bailiffs can seek to recover the following items from your workplace, including:

• Office equipment: This includes computers, printers, scanners, fax machines, copiers, and other electronic devices.
• Company vehicles: This includes cars, vans, trucks, buses, and other vehicles owned by the company.
• Stock: This includes finished goods, raw materials, and work in progress.
• Machinery: This includes manufacturing or production equipment, such as CNC machines, lathes, presses, and conveyors.
• Money: This includes cash held on premises, as well as checks and other negotiable instruments.

Bailiffs can only seize assets that belong to the company’s directors or shareholders if they have personally guaranteed the company’s debts.

What Bailiffs Cannot Take from a Company

There are some restrictions on what bailiffs can seize. For example, bailiffs cannot seize:

• Assets essential to the business, such as tools up to the value of £1,350.
• Assets that are leased or on a hire purchase agreement.
• Property which is being rented.
• Items that are not owned by the company (you are likely to need evidence to prove this).
• Vehicles displaying a valid Blue Badge.

Can Bailiffs Visit Unannounced?

You should receive an enforcement notice providing seven days’ notice before a bailiff visits your premises. Bailiff visits are usually conducted between the hours of 6 am and 9 pm and can occur on any day of the week. While bailiffs can visit a company’s premises unannounced, the enforcement notice serves as the required advance warning.

Can a Bailiff Force Entry to My Office?

Unless bailiffs are high court enforcement officers with a warrant signed by a judge, they cannot force entry to your office, ever!

Even court-appointed bailiffs cannot just turn up for the first time and force entry. They are allowed to enter if they have previously entered and drawn up a list of goods to be removed and not otherwise.

What Does a Bailiff Visit Mean for Directors of Limited Companies?

Limited companies are separate legal entities from their directors. This means that, in general, bailiffs can only seize company assets, not personal assets, even if the company is a one-man limited company. However, there are a few exceptions to this rule:

• If the director has signed a personal guarantee for the company’s debts, bailiffs may be able to seize their personal assets.
• Bailiffs may be able to seize the director’s “tools of the trade” if the company is unable to pay its debts. However, this only applies to sole traders and individual partnerships, not to limited companies.
• If the director has acted fraudulently or with reckless disregard for the company’s debts, they may be held personally liable for the company’s debts. In this case, bailiffs may be able to seize their personal assets.

If you are a director of a limited company and you are facing a visit from bailiffs, it is important to seek professional advice as soon as possible. A solicitor can help you to understand your rights and to protect your assets.

Are Bailiffs Regulated?

Yes, bailiffs, also known as enforcement agents in the UK, are regulated. They must adhere to strict legal guidelines and are overseen by bodies such as the Ministry of Justice. Their conduct, certification, and the procedures they must follow are set out in legislation like the Tribunals, Courts and Enforcement Act 2007 and the Taking Control of Goods Regulations 2013. This ensures they operate within the law and with fairness.

Bailiff Advice for Limited Companies

Navigating through the complexities of debt recovery, especially when bailiffs are involved, demands careful planning and informed decisions. Crafting a feasible repayment plan stands out as the most effective strategy to avoid the stress and potential loss associated with bailiff actions. It’s imperative, however, to propose a payment plan that’s within your company’s financial means. A failure to adhere to the agreed terms can prompt bailiffs to proceed with the seizure and subsequent auction of your assets.

The moment you discern potential financial difficulties within your company, it’s wise to seek expert guidance. Early intervention opens up a broader range of solutions and significantly diminishes the likelihood of immediate enforcement actions, particularly when dealing with HMRC debts.

Should your company be on the cusp of a bailiff visit and you’re uncertain about the next steps, Company Debt is at your service. Our team possesses knowledge and experience in dealing with such predicaments, ensuring that you’re well-informed about your rights and the available options.