What is a Notice of Enforcement?

A Notice of Enforcement is an official written warning issued by a creditor and authorised by the courts (with exceptions) to inform you that your assets will be seized through a Controlled Goods Agreement if you do not promptly settle your liabilities or engage in negotiations for payment.


Your next steps if you have been issued with a Notice of Enforcement

A Notice of Enforcement, formerly known as a Distraint Order Notice, can be issued by creditors to recover money owed to them. While any creditor can serve such a notice, except for HMRC and landlords, all others must go through the courts to obtain one.

HMRC often employs this route to address companies reluctant to settle outstanding taxes, and it is probable that you have already received correspondence from them regarding unpaid liabilities.

Receiving a Notice of Enforcement is a significant matter that requires prompt action. Failure to act quickly may result in the seizure of goods through a Controlled Goods Agreement. Therefore, taking action as soon as the notice is served should be a top priority.

Before discussing what to do in such a situation, let’s step back to examine the reasons why this stage has been reached, using HMRC as an example creditor.


Unpaid Taxes

This is a common scenario leading up to the service of an Enforcement Notice:

  • The company has outstanding tax bills that HMRC is seeking to recover. This could include overdue National Insurance Contributions, tax payments, or VAT.
  • HMRC has attempted, without success, to collect the debt through standard collection procedures.
  • The company may have previously negotiated other arrangements with HMRC, such as extended time to pay, but these agreements have proven ineffective.


The presence of an HMRC officer at your premises may not be entirely unexpected given the circumstances, but an Enforcement Notice is a matter that cannot be ignored, as explained below.

An HMRC Enforcement Agent will visit your company premises to address the debt and serve you with the Enforcement Notice, providing you with a seven-day period (excluding Sundays and Bank Holidays) to take action.

During this time, the debt must be settled in full or an instalment plan must be negotiated and agreed upon with HMRC. Failure to do so will result in the Enforcement Officer returning to take control of goods, which will be sold at a public auction.

HMRC may enlist the services of bailiffs to carry out this procedure, granting them legal entry to fully commercial premises. However, if your premises are partly or fully residential, their access is restricted to the usual routes.


Controlled Goods Agreement

If the debt remains unpaid to the Enforcement Agent, a Controlled Goods Agreement (formerly known as a Walking Possession Agreement) is created, detailing the goods intended for sale. The term ‘seizure’ has been replaced with ‘taking control of goods’ to describe this process.

If the Controlled Goods Agreement is signed, the company is granted an additional seven days to settle the debt in full. After this period, if the payment is not made, the goods listed in the Agreement will be taken and sold. By signing the agreement, you also consent to allowing an officer to inspect or take the goods at any time.

If the Controlled Goods Agreement is not signed, arrangements may be made to immediately remove the goods. It is important to note that bailiffs are not permitted to enter fully or partially residential premises through any means other than the normal entry routes. Forced entry is only allowed into commercial premises.

Goods listed on the Agreement cannot be sold independently by the directors, as it is a criminal offence to do so. These goods are designated for sale in a private auction and must not be disposed of in any other manner.


What are your options after having been served an Enforcement Notice?

You have two primary options to address the debt:

(I). Pay the Debt in Full: Settle the entire tax bill promptly.

(II). Negotiate a Time to Pay Arrangement: Explore the possibility of negotiating a Time to Pay arrangement with HMRC. This involves paying the full tax bill over a more extended period, typically between three and six months.

Engaging with a licensed insolvency practitioner at this stage is advisable. It provides access to professional advice and guidance, easing the process and potentially saving money. The insolvency practitioner can negotiate arrangements on your behalf, alleviating some stress and determining if the business is viable.

After assessing your situation, if the insolvency practitioner believes the company has the potential for profitability, several options may be available. This could include a Company Voluntary Arrangement or Administration—commonly used insolvency procedures that offer relief from creditor pressure and provide alternative routes for some companies.

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Are Enforcement Notices commonly used by HMRC?

Unfortunately, the unequivocal answer is “Yes.” HMRC is intensifying its efforts against companies with outstanding taxes, making a distinction between those genuinely unable to pay and those unwilling to pay.

For the latter group, HMRC is determined to ensure full payment of taxes and is willing to take stringent measures to achieve this goal. While HMRC is responsible for issuing the Enforcement Notice, they may enlist the services of a debt collection company or bailiffs to take control of goods.

It’s important to note that the delivery of an Enforcement Notice doesn’t necessarily require a personal visit. It may be sent by post, email, or fax, and in some cases, it might even be attached to the exterior of your premises if there is no letterbox. If an HMRC Enforcement Agent delivers it in person, they should carry a valid identity card.

It is advisable to carefully scrutinise any notice of action from HMRC for inaccuracies in the delivery method or the specified timeframe for action. It is presumed that any disputes regarding the amount owed should have already been addressed, given that HMRC typically makes several prior attempts to collect the money.

If there are any uncertainties about the validity of the notices, we can provide guidance and assistance in raising a query. If any errors are identified, the enforcement action will be postponed until a corrected Notice is issued.

Senior Partner at Vanguard Insolvency Practitioners | Website | + posts

I am an insolvency professional with a distinguished career specialising in commercial insolvency, adeptly navigating Creditors Voluntary Liquidation, Company Voluntary Arrangements, and Company Administrations. With a comprehensive understanding of insolvency laws and an unwavering commitment to ethical practices.