Expert opinion req regarding tax

Tax_info

Does anyone have any advice on how to deal with a Distraint order from HMRC?

Is this basically HMRB trying to make me BR?

Thank you all in advance

fermi

http://taxaid.org.uk/guides/tax-debt/enforcement-action

has some info on distraint.

They and business debtline are perhaps worth a call.

Tax_info

has some info on distraint.



Thanks for the Taxaid link, however theres parts where its a little ambiguous, it says HMRC officers do not require court orders to enter your premesis then later on it says but they cannot force their way in without a court order?

fermi

There is a world of difference between forcing entry to premises and gaining peaceful entry.

I think it is fairly clear that they can do one without a court order, while taking the quite extreme measure of forcing entry requires them to obtain a separate court order to that effect?

At least that is how I've always understood it. TA or BDL can no doubt clarify.

antonic

Distraint is the start of the HMRC enforcement process.

If you have sufficient assets to cover the debt , they will distrain on the goods and give you 5 days to find the money to release the walk in possession that you may sign.

If you sign the walk in possession and still cant pay they *may* appoint an auctioneer to remove the goods and sell them at public auction.

If these happens you will not get anything like their true value and if there is still a shortfall you are liable for the shortfall.

You also have to pay the auctioneers costs and the costs of removal.

If you have insufficient assets to cover the debt, they will not levy and may consider bankruptcy (if the debt belongs to a sole proprietor or partners in a partnership (each individually), or if it is a Limited Company, apply for a Winding Up Order in the High Court.

Do you mid telling us :

1) Whats the legal entity being pursued (Sole Prop/Partner/Ltd Co) and
2) What type of debt is it ? (SA/PAYE/VAT/CIS).

Any more questions please ask away.

Tax_info wrote: »

Does anyone have any advice on how to deal with a Distraint order from HMRC?

Is this basically HMRB trying to make me BR?

Thank you all in advance

22bear

just to add also from recent personal experience if it helps, HMRC will tend to petition for bankruptcy only if the person owning money is currently still self employed or is now not working and on benefits..if the person the HMRC is chasing for money is employed and currently pays their tax by PAYE they will apply to the court for an Attachment of Earnings order rather than making them bankrupt, effectively forcing the hand of the person owning money to petition for their own bankruptcy

As someone has already said, distraint is only used if the HMRC suspect that the person owning money has significant asset (cars, expensive valuable goods etc)...I was originally threatened with distraint in the standard computer generated letter issued by the HMRC but since I had nothing of any particular value, that was really just an empty threat they use as a tactic to try to force payment

National_Debtline

Hello there. Here is a link to the 'Dealing with tax debt' fact sheet which has been written by our sister organisation, Business Debtline:

http://www.bdl.org.uk/images/12_EW_BDL_Dealing%20with%20Tax%20Debt.pdf

If you would like to find any of the other fact sheets, you can locate them here:

http://www.bdl.org.uk/contenten.asp?ssid=7

I think it is fairly clear that they can do one without a court order, while taking the quite extreme measure of forcing entry requires them to obtain a separate court order to that effect?

At least that is how I've always understood it. TA or BDL can no doubt clarify.

That's my understanding too - and also that seeking permission to force entry is very rarely exercised.

Best wishes,

David.

Tax_info

antonic wrote: »

Distraint is the start of the HMRC enforcement process.

If you have sufficient assets to cover the debt , they will distrain on the goods and give you 5 days to find the money to release the walk in possession that you may sign.

If you sign the walk in possession and still cant pay they *may* appoint an auctioneer to remove the goods and sell them at public auction.

If these happens you will not get anything like their true value and if there is still a shortfall you are liable for the shortfall.

You also have to pay the auctioneers costs and the costs of removal.

If you have insufficient assets to cover the debt, they will not levy and may consider bankruptcy (if the debt belongs to a sole proprietor or partners in a partnership (each individually), or if it is a Limited Company, apply for a Winding Up Order in the High Court.

Do you mid telling us :

1) Whats the legal entity being pursued (Sole Prop/Partner/Ltd Co) and
2) What type of debt is it ? (SA/PAYE/VAT/CIS).

Any more questions please ask away.

Many thanks for your reply, I am a sole trader, in the food industry. The dept is VAT which was not payable as far as I am aware, however, based on their business model on the goods I have purchased they have worked out my profit to be twice as much as declared, which puts me way above the threshold for registering for VAT, needless to say I contested but they wont have non of it, everytime I try to provide explanation through my accountant it merely gets scoffed and rejected without any real consideration, as its only a small business I really couldn't afford thousands of pounds playing tennis with them which lead to me receiving a distraint order.

Can someone confirm that HMRC does not have the power to enter with or without a court order, I am getting conflicting information from places. Also without a court order does it mean they can only enter if invited? If not then they are trespassing?

Again thanks for your input

antonic

HMRC will call on your business and if you refuse to let them into your premises they will walk away and escalate enforcement action to the next level - which as a sole trader may mean petitioning for your bankruptcy.

You are correct to say that they will not break into your business to distrain on your goods - those days are long since gone (thank goodness !).

The VAT debt you have is it based on an Officers Assessment or is it a Belated Notification Penalty ? - Have you asked for an internal review ? - once you have been through the internal review you can still take it to the First Tier Tribunal if you wish.

What should happen is that if you are disputing the debt enforcement action should be held till all the appeals have been exhausted.

Good luck and post back if you need more help.

Tax_info wrote: »

Many thanks for your reply, I am a sole trader, in the food industry. The dept is VAT which was not payable as far as I am aware, however, based on their business model on the goods I have purchased they have worked out my profit to be twice as much as declared, which puts me way above the threshold for registering for VAT, needless to say I contested but they wont have non of it, everytime I try to provide explanation through my accountant it merely gets scoffed and rejected without any real consideration, as its only a small business I really couldn't afford thousands of pounds playing tennis with them which lead to me receiving a distraint order.

Can someone confirm that HMRC does not have the power to enter with or without a court order, I am getting conflicting information from places. Also without a court order does it mean they can only enter if invited? If not then they are trespassing?

Again thanks for your input

Tax_info

antonic wrote: »

HMRC will call on your business and if you refuse to let them into your premises they will walk away and escalate enforcement action to the next level - which as a sole trader may mean petitioning for your bankruptcy.

You are correct to say that they will not break into your business to distrain on your goods - those days are long since gone (thank goodness !).

The VAT debt you have is it based on an Officers Assessment or is it a Belated Notification Penalty ? - Have you asked for an internal review ? - once you have been through the internal review you can still take it to the First Tier Tribunal if you wish.

What should happen is that if you are disputing the debt enforcement action should be held till all the appeals have been exhausted.

Good luck and post back if you need more help.

Many thanks for your reply, I assume its a officer assessment? The VAT worked out which is payable was based on HMRC's business model worked out by the amount of product purchased and how large each portion 'should' be sold, ie very small portions or say soup, thus I should of sold way more!

Kind regards

antonic

If a Visiting Officer came to the premises (or your accountants) and went through the books with you - that is whats called an Officers Assessment.

Before the Assessment was issued they should have written to you and given you 21 days to contest any amount of VAT that they think is due.

If you did not reply then the Assessment would have been issued to you showing the Officers name and how much is due.

This Assessment becomes due & payable 28 days after it is issued and will accrue interest @ 3% until it is paid - interest is also calculated and notified to you monthly.

Is this what has happened ???

Tax_info wrote: »

Many thanks for your reply, I assume its a officer assessment? The VAT worked out which is payable was based on HMRC's business model worked out by the amount of product purchased and how large each portion 'should' be sold, ie very small portions or say soup, thus I should of sold way more!

Kind regards