What is a Controlled Goods Agreement Letter From HMRC?
A Controlled Goods Agreement (previously referred to as a Walking Possession Agreement) is issued by HMRC as part of the distressing process. Distress is where a creditor takes possession of a debtor’s goods to sell them if the debt remains unpaid.
In this case, distress is where a debt is owed to HMRC, and they seek to recover the debt through the possession and sale of the debtor company’s goods. Company debt to HMRC can arise in several ways: falling behind on PAYE, or when the company can’t pay its corporation tax being two examples.
When is a Controlled Goods Agreement Used?
HMRC issue Controlled Goods Agreements (either directly via an Enforcement Officer or through a third-party agent such as a bailiff) in situations where an Enforcement Notice has previously been issued for seven days and has not been paid. The agreement identifies the property that can be taken and sold to settle the debt, alongside an estimate of each item’s sale vale.
The purpose of the Controlled Goods Agreement is for you to agree that the property specified is under distraint and that it will remain on your premises until HMRC consents to its removal or removes the property itself. It also gives you a further seven days to pay your debts in full.
In the agreement, you acknowledge that although you may temporarily retain possession of the goods, you cannot sell, dispose of or transfer the property subject to the agreement without HMRC’s consent. It’s very important to understand that if you break the terms of the agreement and dispose of the property without HMRC’s consent, it is a criminal offence.
What can be Seized with a Controlled Goods Agreement?
There are rules regarding what can and cannot be seized. As a guide, the following cannot be subject to a Controlled Goods Agreement:
- Rented items that don’t wholly belong to the company
- Items that would not be able to be removed without causing damage
- Consumables, livestock or crops
- Safety equipment
- Tools and equipment used for the business’s trade (although these can be seized if there aren’t any alternative assets to seize).
Do I Have to Sign the Controlled Goods Agreement?
You do not need to sign the Controlled Goods Agreement, but as the agreement is issued after HMRC have levied distraint, they are within their rights to remove the property immediately. The walking possession agreement means that you can use the property for business purposes until HMRC decides to enforce the agreement.
What if the Controlled Goods Agreement is Disputed or Under Appeal?
If the amount that is owed to HMRC is under dispute and you are approached by an HMRC enforcement agent with a Controlled Goods Agreement, ensure that you contact the HMRC office to whom the payment is owed immediately to discuss. If the outstanding amount is under appeal, it cannot be seized, and you should ask the enforcement agent to leave.
Will I Receive Warning from HMRC about Enforcement Action – Taking Control of Goods?
HMRC have the right to remove and sell the property at any time after the date specified in the Controlled Goods Agreement if you haven’t paid the amount outstanding plus any relevant costs, charges and fees by that date. The date specified is normally seven days after the date of the agreement.
Contact us for Free Advice
If you have received a Controlled Goods Agreement and need help or HMRC arrears advice, please call us on 08000 746 757 or email for a confidential, no obligation discussion with one of our experienced advisers. Alternatively, you can call our senior turnaround practitioner, Sue Collins direct on 07949 969 006. Sue is in touch with HMRC regularly and is very experienced in helping businesses with difficulties in this area.