If you’ve been served an enforcement notice by HMRC, understanding your rights can improve the likelihood of a positive outcome.

Once an enforcement notice has been served, you are left with the choice to either pay the debt in full, or negotiate a Time to Pay arrangement.

At this stage of the process, this is not a problem that can be swept under the carpet. Taking too long to act or simply ignoring the notice altogether will lead to a visit from HMRC Enforcement Officers or bailiffs. They will then use a Controlled Goods Agreement to recover business assets and repay your tax liability.

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HMRC Notice of Enforcement Letter

What is a Notice of Enforcement?

These notices, sent in the form of a letter, are warning signs that HMRC has now escalated your situation to the point where they are going to enforce bailiff action.

This means your company’s goods will be seized and sold at auction, so that HMRC can recoup some of the money owed to them.

Can Any Creditor Serve a Notice of Enforcement?

Yes, it is not only HMRC who can send you a notice of enforcement, although they can do so without the use of a court order (as can landlords) which makes it a commonly used method for them to recoup debt.

Other creditors must apply to the court for an Enforcement Order, which comes with a fee. As part of this process the creditor may apply (Using Form N316) for the court to order the debtor to attend and give details of its accounts.

After this, the creditor has the right to ask the court to send bailiffs to collect the debt, freeze assets, or charge the debtors land or property.

Is Distraint the same as Enforcement Action?

Yes, distraint is a legal term referring to the act of seizing goods or property in order to satisfy a claim. Previously, HMRC used to refer to enforcement as distraint, though it has now replaced this terminology with the adoption of ‘Enforcement Order.’

What’s the Contact Number of the HMRC Enforcement & Insolvency Service?

Always check any letters which have been sent to you for specific contact numbers and keep your reference number handy.

Failing that, the telephone number of the main EIS Office in Worthing is as follows:

Phone: 03000 519 936

Do HMRC use Bailiffs?

This can be a potential source of confusion for company directors. HMRC does not actually employ its own bailiffs. Instead, it uses the services of a bailiff company to enforce the seizure of the goods.

There are also High Court Enforcement Officers to consider (HCEO). They work according to a Writ of Control, which empowers them to recover debts of £5,000 or more. An HMRC bailiff can collect payments and seize goods for the recovery of debts below this amount.

What are HMRC’s Enforcement Powers?

The various parties have different rights, so it’s important you establish exactly who has visited your premises. An HMRC Enforcement Officer will carry an identify card, so make sure you ask to see it and note down the details.

Can HMRC bailiffs force entry?

They have the right to force entry into your commercial premises if they have been authorised by a Justice of the Peace. If your premises are part residential as well as commercial, they can only enter the property by normal routes and during specific times.

At this point in the enforcement action, it is still possible to negotiate with HMRC officers. They will issue you with the enforcement notice, which gives you seven days to pay the debt. If you cannot repay the debt in full, you may be able to negotiate a Time to Pay arrangement at this time. If you stick to these arrangements, action to seize goods from your premises will cease.

It might be that the enforcement notice is not delivered in person. It is still binding if it is sent in the post, by fax or even via email. Alternatively, it could be attached to the outside of the building if you’re out when the officers arrive.

See our full article on this here.

Non-payment Will Mean a Return visit from HMRC bailiffs

If payment negotiations are unsuccessful and you fail to pay the amount owed within seven days, the bailiffs will return. At this point, they will come to your premises to take an inventory of your business’s assets. This is all part of the controlled goods agreement process. They will then present you with the inventory list for you to sign.

Sign on the dotted line and you will then have a further seven days in which to pay the debt. However, fail to sign the agreement and the Enforcement Officer could start the immediate seizure of goods (distraint). Calling their bluff can be a very risky game to play.

Controlled Goods Agreement CGA (also called ‘Walking Possession’)

Choosing to sign the controlled goods agreement gives the officers the right to inspect or take the goods at any time. As a company director, you are prohibited from removing or selling the goods. This would constitute a criminal offence and would not help the situation you are in.

Goods will be seized to not only cover the cost of the debt, but also to pay for the enforcement action. As the goods are sold at public auction, they often sell for far less than they are actually worth. For this reason, Enforcement Officers will take what might seem to be an excessive number of goods.

Have You Been Threatened with Enforcement Action?

HMRC does not have to go through the courts to seize goods to collect money they are owed. For this reason, you should always act quickly if you are threatened with enforcement action. HMRC has been known to target the wrong businesses and make other administrative mistakes, so you should check all the details on the enforcement notice one it’s served.

At Company Debt we can help you check the details of the enforcement notice and provide expert assistance to help you negotiate a deal. If you have received or been threatened with an HMRC enforcement notice, please call our free directors’ helpline today for a free consultation – no strings attached.