If your company has unpaid tax debts and previous attempts to collect them have failed, HMRC may escalate matters by sending an enforcement officer to the business premises.
This is commonly described as sending “HMRC bailiffs”, although the legal process in England and Wales is known as Taking Control of Goods.
HMRC can use this procedure to take control of company assets and, if the debt remains unresolved, potentially sell them to recover unpaid tax, interest and enforcement costs.
💡 Quick Answer
HMRC can use enforcement officers to take control of company goods where tax debts remain unpaid.
HMRC must normally issue a written Notice of Enforcement before taking control of goods. An enforcement officer may then visit business premises and can secure, remove or enter into a Controlled Goods Agreement over qualifying assets.
If HMRC enforcement has reached this stage, directors should deal with the debt urgently and consider whether the company can realistically afford repayment.
Can HMRC Send Bailiffs to a Limited Company?
Yes.
HMRC can take enforcement action against a limited company that fails to pay tax debts.
In England and Wales, HMRC uses the Taking Control of Goods procedure. This replaced the old process known as distraint in 2014.
The aim of an enforcement visit is usually to obtain payment or agree a satisfactory payment arrangement. If that cannot be achieved, qualifying company goods can be taken under control and potentially sold.
This is separate from HMRC’s power to recover qualifying tax directly from bank accounts through Direct Recovery of Debts. See how HMRC can take money from a business bank account.
If you are still at the earlier debt-collection stage, see our guide to HMRC Debt Collection Agencies.
Does HMRC Need a Court Order Before Sending Enforcement Officers?
Not necessarily.
HMRC has statutory powers allowing it to use Taking Control of Goods in England and Wales to recover qualifying unpaid taxes without first obtaining a court judgment.
Section 127 of the Finance Act 2008 provides HMRC with this enforcement power.
That makes HMRC different from many ordinary commercial creditors.
Directors should therefore not assume that HMRC must obtain a CCJ before enforcement can begin.
Will HMRC Give Notice Before a Visit?
Yes.
HMRC must issue a written Notice of Enforcement before taking control of goods.
The notice includes details of the debtor and relevant tax debt and begins the formal enforcement process. HMRC’s current compliance-stage fee for issuing the notice is £79.
Receiving a Notice of Enforcement is therefore an important warning that the debt has moved beyond ordinary collection activity.
Directors should act immediately rather than waiting for an enforcement officer to arrive.
What Should You Do If You Receive a Notice of Enforcement?
First establish:
- which HMRC liability is being pursued;
- the amount outstanding;
- whether HMRC’s figures are correct;
- whether the company can pay some or all of the debt; and
- whether a realistic repayment arrangement is possible.
If the company can afford instalments, it may still be possible to discuss a Time to Pay arrangement.
HMRC’s own enforcement guidance says payment arrangements can still potentially be discussed during the Taking Control of Goods process, even up to the point before goods are sold.
What Can HMRC Enforcement Officers Do?
An HMRC enforcement officer can take control of qualifying goods belonging to the debtor company.
HMRC guidance sets out several ways goods can be taken under control, including:
- securing goods on business premises;
- immobilising goods on a highway;
- removing goods and storing them elsewhere;
- leaving someone in possession of the goods; or
- entering into a Controlled Goods Agreement.
HMRC states that its preferred approach where appropriate is often a Controlled Goods Agreement.
What Is a Controlled Goods Agreement?
A Controlled Goods Agreement allows assets to remain at the business premises while legally being placed under HMRC’s control.
The company may usually continue using the goods subject to the terms of the agreement, but they must not be sold, removed or otherwise dealt with contrary to the agreement.
If an agreed payment arrangement subsequently fails, HMRC may be able to return and continue enforcement action.
Can HMRC Enter Business Premises?
HMRC enforcement officers have statutory rights of entry to relevant premises for the purpose of Taking Control of Goods.
HMRC’s internal guidance states that officers may enter the debtor’s premises by a door or usual means of entry when carrying out the procedure.
Directors should not physically obstruct an enforcement officer.
They are, however, entitled to ask the officer to identify themselves and provide evidence of their authority. HMRC guidance specifically states that the debtor can request to see identification and the officer’s authority to take control of goods.
Can HMRC Force Entry?
The rules around entry and re-entry can be complicated and depend on the type of premises and stage of enforcement.
For company directors, the safest approach is not to assume that simply refusing entry will make the problem disappear.
HMRC has statutory enforcement powers and can potentially return to premises in certain circumstances.
If officers are already attending your premises, urgent professional advice may be appropriate.
What Goods Can HMRC Take?
HMRC may take control of qualifying assets belonging to the debtor company.
Depending on the business, these could potentially include:
- vehicles;
- machinery;
- equipment;
- stock;
- office equipment; and
- other assets owned by the company.
HMRC must follow the Taking Control of Goods rules and cannot simply seize anything it finds.
Can HMRC Take Assets That Do Not Belong to the Company?
Generally, enforcement should relate to goods belonging to the debtor.
This means ownership can be important where assets are:
- leased;
- hired;
- financed;
- personally owned by directors; or
- owned by another business.
Directors should have evidence available where goods at the premises are not owned by the company.
Disputes over ownership can become complicated, so professional advice may be required where valuable third-party assets are involved.
Can HMRC Take a Company Vehicle?
Potentially.
HMRC can take control of qualifying vehicles belonging to the debtor, including vehicles located on a highway in appropriate circumstances.
Whether a particular vehicle can be taken depends on ownership and the applicable exemptions.
A vehicle genuinely owned by a finance company rather than the debtor may need to be treated differently from an asset owned outright by the company.
Are Any Goods Protected?
Yes.
The Taking Control of Goods regime contains exemptions.
HMRC guidance confirms that certain goods cannot be taken under control, although the precise rules depend on the debtor and circumstances.
Directors should therefore not assume every asset at the premises is automatically available for seizure.
What Fees Can HMRC Add?
Enforcement can substantially increase the cost of an unpaid tax debt.
HMRC’s current fee structure includes:
- £79 compliance-stage fee when the Notice of Enforcement is issued;
- £247 enforcement-stage fee when an enforcement visit takes place; plus
- 7.5% of the principal debt above £1,900 at the enforcement stage.
Further fees can potentially arise if enforcement progresses to the sale or disposal stage.
This is another reason to address HMRC arrears before enforcement reaches this point.
Can You Still Arrange Time to Pay After Bailiffs Are Involved?
Potentially, yes.
HMRC’s guidance states that officers should remain prepared to discuss payment options during the enforcement process, including potentially up to the date of sale.
However, once enforcement has begun:
- additional fees may already be payable;
- HMRC may expect stronger evidence of affordability; and
- the company has much less room for delay.
If you need to make a proposal, see How to Apply for HMRC Time to Pay.
What Happens If a Payment Arrangement Is Missed?
If HMRC suspends enforcement because a Time to Pay arrangement is agreed and the company later defaults, enforcement can restart.
HMRC’s current internal guidance confirms that Taking Control of Goods action can recommence following a breach of the arrangement.
See our guide to Missing HMRC Time to Pay Payments for the wider consequences.
What Happens If a Payment Arrangement Is Missed?
If the company cannot afford the debt or a realistic payment arrangement, repeatedly delaying enforcement is unlikely to solve the underlying problem.
At that stage directors should assess whether the business is insolvent.
Our HMRC Tax Debt guide explains the wider options available for VAT, PAYE, Corporation Tax and other HMRC arrears.
Depending on the circumstances, options may include:
Can HMRC Liquidate a Company After Enforcement Fails?
Potentially.
Taking Control of Goods is only one of HMRC’s recovery options.
Where substantial tax debts remain unpaid and other recovery methods do not resolve the position, HMRC may ultimately pursue insolvency proceedings.
This can include presenting a winding-up petition against the company.
See our guide to Can HMRC Liquidate a Company? for the next stage of the enforcement process.
Get Help With HMRC Enforcement
A Notice of Enforcement or visit from an HMRC enforcement officer is a serious escalation.
At this point, the question is not simply whether the company owes HMRC money, but whether the business can realistically repay the debt and continue meeting its ongoing liabilities.
Business Helpline provides free, confidential initial advice to limited company directors facing HMRC enforcement and financial distress.
We can help you understand whether repayment, restructuring or a formal insolvency solution may be appropriate.
Call our free 24-hour helpline on 0800 088 2142 or request a confidential call back.
HMRC Bailiff FAQs
Are HMRC bailiffs the same as debt collectors?
No. An external debt collection agency generally contacts debtors and seeks payment. An HMRC enforcement officer can exercise statutory Taking Control of Goods powers.
Do HMRC need a CCJ before taking company goods?
Not necessarily. HMRC has statutory powers under the Finance Act 2008 allowing Taking Control of Goods for qualifying tax debts in England and Wales without first obtaining a court judgment.
Can HMRC bailiffs enter business premises?
HMRC enforcement officers have statutory rights of entry to relevant premises when exercising Taking Control of Goods powers.
Can HMRC seize company vehicles?
Potentially, where the vehicle belongs to the debtor company and no applicable restriction prevents enforcement.
Can I negotiate with HMRC after receiving an enforcement notice?
Potentially. HMRC guidance allows payment arrangements to be considered during enforcement, although fees and additional considerations will apply once enforcement has started.
What happens if HMRC cannot recover enough from company assets?
HMRC may continue considering other debt-recovery options. In serious unresolved cases this can ultimately include insolvency proceedings.
