HMRC collects unpaid debts under The Taking Control of Goods Regulations 2013

The period of leniency from HM Revenue & Customs (HMRC) seems to be coming to an end with reports of an increase in recovery action for unpaid debts.

One option open to HMRC is to issue a Controlled Goods Agreement (“the Agreement”) under the above Regulations which can be issued after a Notice of Enforcement has remained unpaid after 7 days.

An Agent will attend site and complete the Agreement which identifies the value of the assets that can be taken and sold to settle the debt.

The purpose of the Agreement is for the Company to acknowledge which assets are deemed as controlled goods, which will initially remain on the Company’s premises until HMRC arranges for its removal. This does, however, give the company a further short period (7 days) to clear the debt.

During this time the Company cannot sell, dispose of or transfer the controlled goods without the consent of HMRC and it will be a criminal offence if the terms of the Agreement are breached.

Not all property can be seized, and exempt property includes:

  • Items that are not wholly owned to the company
  • Items that could not be removed without causing damage to the premises
  • Safety equipment
  • Sheep dogs and guard dogs

Essential tools and equipment used for the company’s trade are generally exempt items although this does not apply to HMRC provided non-exempt items are listed before exempt items.

Although the company does not have to sign the Agreement it does provide a short breathing space allowing the company to continue to trade within the restrictions of retaining the controlled goods.

However, getting to this point causes stress and uncertainty for the company as a whole and we recommend that directors:

  • contact HMRC to negotiate a payment plan as early as possible and do not ignore HMRC correspondence
  • seek advice from an insolvency practitioner as soon as they become aware of financial problems to keep as many options open as possible.

These may include setting up a Company Voluntary Arrangement, a Restructuring Plan or Administration, all of which can explored as a way of saving the company.

Posted in Insolvency, News.