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Tax Tip

HMRC Powers to seize businesses grew four fold in two years. 25 November 2011

A recent study has published figures that the number of occasions when HMRC has used its powers of distraint to seize the assets of late-payers, overwhelmingly businesses, has increased more than four-fold, rising to 7004 in the last year (twelve months to April 2011), up from 1,675 cases two years ago (year ending April 2009)

The report also points out that all the seized assets are generally sold off at ‘fire sale’ prices that do not cover the full tax liability in question, and also reduce the chances of other creditors being repaid.
A HMRC spokesperson responded: "The number of distraint visits has increased but cases where this leads to seizures is very small. In 99% of cases, HMRC receives the money owed before having to seize assets. HMRC is becoming more efficient in seizing money, that’s our job, but seizing assets is the last resort. HMRC purely uses its powers to seize assets of businesses who owe us tax when all other avenues have been entirely exhausted."

What is Distraint?

Distraint is the legal process which allows the HMRC to take your possessions for sale at auction towards settlement of an unpaid tax bill. Distraint also involves costs which the taxpayer has to pay. They become part of the debt and are paid first from the proceeds of any sale, before the original debt itself.

When and who visits?

The collector may visit at any time between sunrise and sunset, on any day except a Sunday or a bank or public holiday. No appointment is made. The collector may be accompanied by a private bailiff. The bailiff has no legal powers against you, and is there to advise the collector on the value of your goods.

Tonmoy Kumar, Manager of the Accounts Department of ABDS says:

“The collector will need to enter your home or business before the process of distraint can begin. By law, this must be peaceful entry. The collector may not make a forced entry without a court order, and these are very unusual. Denying the collector access does not of course end the matter; it is a wake up call however and will give you a bit of time to sort out your affairs. Outstanding Tax Returns should be dealt with urgently.”

See also
Or if you have any questions or concerns about outstanding Tax liabilities, contact ABDS.

ABDS Chartered Certified Accountants of Southampton.
Tel: 023 8083 6900  E-mail:

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