The taxman has used his distraint powers – which entitle Her Majesty’s Revenue and Customs to seize a debtor’s assets – twice as much in the last 12 months as in the previous year; according to figures obtained by Syscap, a UK finance provider to the professions sector.

HMRC issued distraint orders to businesses 10,577 times in the year to 31 March 2012, compared to 5,520 times in the previous year.

HMRC’s distraint power is nowadays known as “legally taking possession of goods”.  It allows the tax collectors to visit a company’s premises without warning, and without a court order, so as to collect unpaid taxes and duties. If the business then doesn’t pay up within 5 days, HMRC can remove and sell its assets at auction – and use the proceeds towards part- payment. The values obtained at auction are effectively fire sale values and seized assets will frequently not fetch the original cost of the assets, or their replacement value.  Typically HMRC will take assets which are easy to remove; e.g. vehicles and computers.  If key assets are taken, the business may not be able to function any longer.  If the seized assets only reach negligible values at auction, then the business can be left with no assets – and so still have a large outstanding tax bill, and then face legal proceedings from HMRC for the unpaid balance.

What does this mean for me?
If HMRC is pursuing you or your business for an unpaid tax bill there may be several things you can do about this. You may be able to negotiate what is known as a “time to pay” arrangement. Also, the amount of tax being demanded has frequently been based on estimates: particularly in a tax investigation case.  Appeals can be made against the estimates, and postponement of the collection of the tax obtained; whilst the correct figure of tax is negotiated and agreed.  However, once legal action commences it can be very difficult to stop the juggernaut. It is essential that prompt action is taken.

How can Lynam tax experts help me?
Lynam Tax Experts have over 70 years’ experience of negotiating levels of tax and payment arrangements. For a free initial, and no obligation discussion telephone

Paul Lynam on: 0845 643 9997
or Andrew Nutbrown on: 07718 778710