27. Motor Vehicles
Dealing with an insolvent's motor vehicle, including matters to be taken into account before the vehicle is sold
DVLA – Driver and Vehicle Licensing Agency
SORN - Statutory Off Road Notification
27.1 General
This chapter gives advice on dealing with motor vehicles and related issues such as insurance, operators’ licences and ‘personalised’ number plates.
Information on motor vehicles as exempt property (including guidance on establishing if a vehicle is exempt) is contained in chapter 25.
Of all the items of property encountered by official receivers, vehicles are perhaps the ones most likely to give rise to a liability and, in this respect; vehicles should be dealt with quickly and correctly, following the guidance in this chapter.
The chapter is divided into the following sections:
Dealing with a vehicle – general Vehicles subject to third party interests (including finance) Sale of vehicles with realisable value Disposal of vehicles with no realisable value Dealing with personalised (cherished) registration numbers
27.2 Motor vehicle to be dealt with proactively
Unlike most other property of an insolvent, a motor vehicle is a potential source of liability in that there are obligations attached to the ownership and use of a vehicle.
As a result of this, the official receiver does not have the luxury of time when dealing with a motor vehicle and should, in all cases, deal with motor vehicles both proactively and expeditiously, whilst ensuring that they and the estate are protected from potential liabilities and from losses to the value of the vehicle as an asset.
27.3 Establishing the ownership of a vehicle
The official receiver should, of course, only deal with a vehicle that is property of the insolvent. Generally, it will be appropriate to rely on a director’s or bankrupt’s account if they maintain that the company/they own a motor vehicle. Where there is doubt, the official receiver should look to indicators such as who is insuring the vehicle, who is the registered keeper and, significantly, the source of the monies when the vehicle was purchased and/or the contract under which it was purchased.
The official receiver should be careful to check that there are no third party interests in the vehicle and that the vehicle is not exempt (see chapter 25) before realising it.
27.4 Establishing the details of and whereabouts of a vehicle
It is important that the official receiver establishes the current whereabouts of a vehicle owned by an insolvent as soon as possible after the making of the order, as this will greatly assist in protecting the vehicle. Ideally, this should be when conducting the initial enquiries or on first contact with the director/bankrupt, whichever is the sooner.
The official receiver should also establish, at that stage, the following details regarding the vehicle:
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Make and model
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Registration number
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Year of registration
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Engine size
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Colour
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Name, address and telephone number of any third party controlling or using the vehicle
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Details of any finance outstanding on the vehicle (including the identity of the finance company, the nature of the finance agreement and the amount outstanding)
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Details of any insurance cover on the vehicle (including the type of cover held and the identity of the insurers and/or brokers)
27.5 Exemption of a motor vehicle from the estate of a bankrupt
There are grounds under which a motor vehicle may be treated as exempt property in a bankruptcy [section 283]. The considerations for the official receiver, as trustee, when deciding if a vehicle should be dealt with as exempt property are dealt with in chapter 25.
Where a motor vehicle is treated as exempt property, it will not be necessary to deal with the motor vehicle as property of the estate though, of course, the vehicle should be protected until the decision regarding exemption is made.
27.6 Third party interests in a vehicle
A third party, such as a finance company, leasing company or hire company may have an interest in a vehicle used by the insolvent. Depending on the nature of the interest this is likely to have an effect on the value of the property to the estate and will affect whether it forms property of the estate at all. It may therefore limit the extent to which the official receiver, as liquidator or trustee, will be able to realise the vehicle for the benefit of the estate.
27.7 A stolen motor vehicle
Where the director or bankrupt reports that the company’s/their vehicle has been stolen prior to the making of the insolvency order the official receiver should obtain a full account of the circumstances of the theft and also have the director or bankrupt provide a copy of the crime report showing the crime reference number. These actions are to establish that the theft is real and not an attempt to put the vehicle out of reach.
Any monies due under a related insurance claim should be secured for the estate and, where a claim has not yet been made, the official receiver should make a claim for the benefit of the estate. This is so even if the vehicle would have been treated as exempt property, if not stolen (see chapter 25).
In addition, the official receiver should reclaim any unexpired tax on the vehicle, by writing to Disposal, DVLA Swansea, SA99 1BD, and enclosing a copy of the Bankruptcy order or Winding up order and the log book, if available, and explaining why the official receiver is reclaiming the money rather than the insolvent. If the logbook is unavailable we should enclose the registered keeper’s name and address and full details of the vehicle to enable the DVLA to match up their records. This should be undertaken as soon as possible as the DVLA will only provide refunds on full unexpired months, not part-months.
A stolen vehicle should not be disclaimed until any related insurance claim has been made. In the meantime the reporting of the theft of the vehicle should be sufficient to protect the official receiver from any liability in relation to the vehicle.
27.8 Overview
On application to the Driver and Vehicle Licensing Agency (DVLA), the DVLA will issue a vehicle with a registration number [Vehicle Excise Registration Act 1994, section 23], unique to that vehicle, which is shown on the front and rear of that vehicle (rear only for most motorcycles) and will be detailed on the vehicle registration certificate (V5C) [Vehicle Excise and Registration Act 1994, section 21].
27.9 V5C vehicle registration certificate
The V5C vehicle registration certificate (also commonly known as the ‘logbook’) records details of the vehicle such as its vehicle identification number (VIN), make, model and registered keeper. The V5C also contains ‘tear-off’ slips to be used to notify DVLA of events affecting the vehicle – primarily the transfer of the vehicle to a new keeper.
27.10 The registered keeper of a motor vehicle
The registered keeper of a motor vehicle is the person who keeps the vehicle on the public road and has responsibility to tax and register the vehicle. This is not necessarily the owner of the vehicle, but the identity of the registered keeper and the identity of the owner are usually the same. As outlined above the identity of the registered keeper is shown on the V5C, though in the absence of a V5C the DVLA can provide the details of the registered keeper to the official receiver.
27.11 Establishing the current and/or past keeper of a vehicle
The official receiver can establish who the registered keeper of the vehicle was at a specific date by submitting a request to the DVLA using form VQ615 (see following). Where the enquiry seeks to establish whether the bankrupt has an historic interest in the vehicle, this should be explained in a covering letter.
27.12 Establishing the position
Where a vehicle is an asset of an insolvent estate it is important to establish the position with regard to the insurance of the vehicle. As a minimum, the official receiver should seek to obtain the information outlined in chapter 14, paragraph 14.20.
Where the details of the insurance company/broker are known, the official receiver should notify the insurance company of the insolvency, confirm with that company that the insurance is still in place and ask the company to note the official receiver’s interest in the policy in its records.
27.13 Motor vehicle with no insurance/inadequate insurance
If the insolvent does not have cover or has cover that is insufficient (for example, third-party only cover), then the official receiver should effect their own insurance.
The official receiver should ensure that the value of the motor vehicle is sufficient to meet the insurance premium. Once the motor vehicle has been sold or otherwise disposed of the official receiver should cancel the policy in accordance with the guidance in chapter 25.
27.14 Road tax
With limited exceptions (primarily relating to vehicles used in connection with agriculture [Vehicle Excise and Registration Act 1994, section 5] road tax (properly called Vehicle Excise Duty) is payable on every vehicle registered in the UK and used on or kept on the public road [Vehicle Excise and Registration Act 1994 section 1]. The rate of tax varies depending on the type of vehicle and the level of emissions of that vehicle and is payable in advance for periods of 6 or 12 months. When a vehicle is sold, or otherwise disposed of, it is possible to reclaim any tax paid for the unexpired portion of the tax (see paragraph 27.50).
If the vehicle is not kept or used on the public road, the registered keeper is required to inform the DVLA of this fact by completing a Statutory Off Road Notification (SORN) (see following paragraph), following which the vehicle will not be subject to taxation.
The DVLA carry out an automatic check of all registered vehicles and if any vehicle is untaxed and not subject to a SORN, the DVLA will issue an automatic penalty. The official receiver should check that any vehicle owned by the insolvent is taxed or subject to a SORN.
27.15 Statutory Off Road Notification (SORN)
Where a vehicle is being kept off the public road, it is not necessary to meet the requirements of the legislation as regards insurance [Road Traffic Act 1988, Part VI] and taxation. The registered keeper is required annually to declare officially that a vehicle is kept off-road, by completing a SORN.
27.16 Official receivers’ staff not to drive vehicles
In no circumstances should official receivers’ staff drive a motor vehicle belonging to an insolvent estate. If the vehicle needs to be moved – for example, to a place of safety – agents should be instructed as a matter of urgency, with the costs being a charge on the estate.
27.17 Vehicles owned and operated commercially
The vast majority of vehicles encountered by the official receiver will be small passenger vehicles or light goods vehicles owned, and operated by a bankrupt. The advice in this chapter is equally applicable to vehicles owned and operated by a company or bankrupt on a commercial basis. The following paragraphs apply particularly to commercial vehicles.
27.18 Standard operator’s licences
Where the insolvent is the owner of a vehicle that exceed 3.5 tonnes (a heavy goods vehicle – HGV) or was a vehicle used to carry more than eight passengers (a public service vehicle – PSV), the insolvent will have been required to obtain a standard operators licence.
A licence is normally issued for a period of five years and gives details of each vehicle and trailer covered by it. Licences are issued by the Traffic Commissioner for Great Britain (Traffic commissioner).
27.19 Accounting for vehicles on the standard operator’s licence
Where the insolvent holds a HGV or a PSV licence then a search should be made of the Traffic Commissioner’s website. The Website allows you to search for licences based on location, business name, Licence number and Person’s name and will give various information including operating addresses, contact details and numbers of each type of vehicle covered by the licence. This could assist with tracing of businesses and asset recovery enabling the Official Receiver to check that all vehicles have been accounted for.
27.20 Notification to the Traffic Commissioner of the insolvency order
Where the holder of a standard operators licence is subject to an insolvency order, the official receiver should inform the Traffic Commissioner responsible for the area of operation of the making of the order. The insolvent’s licences and discs should be returned to the Central licensing office Hillcrest House, 386 Harehills Lane, Leeds, LS9 6NF along with a request that a refund be issued for any unexpired portion of the licence. It is not possible for a licence to be transferred to another party.
Where a disc is not recoverable, the Central Licensing Office can usually accept written confirmation from the official receiver of its loss, and issue a refund.
27.21 Vehicles with third party interest
Whilst the insolvent may be the registered keeper of a vehicle, the vehicle may not be available to the official receiver as an asset. Other parties (and, primarily, we are talking about lenders in this context) may have an interest in the vehicle or may retain limited ownership rights over the vehicle. Equally, the insolvent may have use of a vehicle that it not owned by themselves – such as a vehicle that is leased, rented or provided by their employer.
27.22 Official receiver to check extent of third party ownership rights before dealing with vehicle
It goes almost without saying that the official receiver should not deal with a vehicle (by, for example, disposing of it) until they are sure that no other party has any valid claim over the vehicle. It is possible for the official receiver to conduct a search of outstanding finance on a vehicle using the facilities provided by companies such as HPI or by requesting agents to undertake the search on the official receiver’s behalf. There is a charge for conducting the search and such searches should therefore not be carried out as a matter of routine. HPI Ltd provides a glossary of terms useful in interpreting HPI searches.
Generally, it will be sufficient to rely on information provided by the director or bankrupt to assess whether a vehicle is subject to any third party interest. Where there is doubt, the official receiver should request that their agents conduct a finance search before selling the vehicle.
27.23 Vehicles purchased using finance
The most common third party right claimed in a vehicle is that of a finance company where the finance agreement gives the lender rights of ownership over the vehicle (see paragraph 27.25).
An agreement where the lender retains no rights to the vehicle is generally a simple loan and will usually be called a ‘credit agreement’ on the relevant documentation. It may be arranged through a ‘High Street’ lender directly by the borrower or through a specialist lender by a car dealer on behalf of the borrower. Where there is doubt, the official receiver should peruse the terms of the agreement to confirm that the lender retains no ownership rights. Where the vehicle is not subject to finance the official receiver may deal with the vehicle normally.
Sometimes, the lender will retain the car ownership documents (primarily, the V5C) to prevent the borrower from disposing of the vehicle. Unless the agreement provides otherwise, the finance company will have no rights over the vehicle and the official receiver should realise the vehicle as appropriate, requesting that the loan creditor provide them with any vehicle documents it is retaining.
27.24 Action to take in respect of vehicle purchased using finance
Where an official receiver is dealing with a vehicle purchased using finance, they should establish the type of agreement (that is, whether it is a simple credit agreement or the lender has retained an interest in the vehicle) and the amount required to settle the agreement.
Where the finance is a simple credit agreement the official receiver may deal with the vehicle in line with later guidance.
27.25 Agreements where the finance company has rights over the vehicle
There are a number of finance agreement types available to consumers which allow for the use and in some cases the purchase of a new vehicle. Some finance agreements ensure ownership or repossession rights over the vehicle remain with the lender until a specific date or when certain conditions (such as the amount of repayment made) are met. Types of these agreements include:
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Personal Contract Purchase (PCP)
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Hire Purchase
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Balloon Hire Purchase
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Personal Contract Hire (PCH)
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Conditional Sale
Some agreements simply spread the purchase price of a vehicle over an agreed period while others allow the consumer to use a vehicle for a set period of time and then hand it back.
Payments due under these agreements normally consist of an initial payment (in the form of a deposit or advance rental), regular monthly payments and a final payment (in some agreements the final payment is optional). Other charges may also be due such as excess mileage charges, damage charges and option to purchase fee however these would depend upon the type and terms of the individual agreement.
Subject to any express clause in the agreement, the rights of the insolvent under the agreement (such as the right to acquire ownership of the vehicle) will pass to the official receiver as liquidator or trustee. Advice on whether to exercise those rights is in paragraph 27.26.
It should not be assumed that because a vehicle was purchased on finance that the lender has any rights over the vehicle, where there is doubt, the official receiver should peruse the terms of the agreement to confirm the extent to which the finance company retains ownership rights.
27.26 Check ‘equity’ position of vehicle before realisation
Where a vehicle is subject to finance, the official receiver must consider the amount required to settle any finance agreement when considering the value of the vehicle to the estate. If there would be a realisable value after taking the outstanding finance (including possible additional charges for excess mileage and or damage etc.) and costs of sale into account, the official receiver may instruct agents to deal with the sale of the vehicle and the settling of the finance.
If the vehicle has no realisable value, the finance agreement should be disclaimed. The finance company should also be notified of the location of the vehicle, as in the address of the person who retains control of it.
The official receiver may make a payment from the estate account to secure a vehicle for the estate. Such a payment should only be made where there is a demonstrable benefit to the estate in doing so. The majority of conditional sale or hire-purchase type agreements are structured in such a way that this is rarely an appropriate way to proceed.
If the payment required is over £2,500, the guidance in chapter 1 regarding the requirement to obtain permission from ORS Advice should be followed before committing to any expenditure.
27.27 Lenders actions where vehicle subject to finance
In practice an agreement where the lender retains an interest in the vehicle will usually contain a clause giving the lender the right to terminate the agreement in certain circumstances, such as default on repayment or the making of an insolvency order against the borrower.
Where the lender exercises this right in relation to an agreement that relates to property of an insolvent, the potential benefit to the official receiver as liquidator or trustee will be restricted to the rights of the insolvent on termination of the agreement. The key right that the insolvent would hold in this regard is that the vehicle may not be repossessed without a court order if more than two thirds of the total price of the vehicle has been paid [Consumer Credit Act 1974, section 90]. In deciding whether to consent to such an order, the official receiver should consider the value of the vehicle to the estate were it to be sold (taking into account the need to settle the finance and any arrears).
27.28 Creditor taking vehicle where no right to repossess
It is not unknown for a creditor to take possession of a bankrupt’s vehicle despite having no right to do so (either because the agreement was a credit agreement or because there was no right to repossess without a court order). Often, it will be the case that the bankrupt has voluntarily ‘handed back’ the vehicle. In such a case, the official receiver should notify the creditor of their interest in the vehicle and decide whether there is any benefit to the estate in instructing agents to collect the vehicle from the creditor for sale.
It is likely to be better that the vehicle is left with the creditor for them to conduct the sale with their reasonable costs being taken from the sale proceeds and the remainder being remitted to the official receiver.
27.29 Effect of third party paying the outstanding finance
Where a third party pays the outstanding finance on a vehicle, for example, a third party pays the finance on behalf of a bankrupt, the title to the vehicle will pass to the hirer (in this case, the bankrupt) and not to the third party [Bennett v Griffin Finance (A Firm) [1967] 2 QB 46]. Depending on the terms of the finance (i.e., whether the finance company retained ownership of the vehicle) and when the finance was paid-off, this will either have the effect of increasing the value of the vehicle to the estate, or making it available to be claimed as after acquired property (see chapter 36).
27.30 ‘Logbook loans’
These are increasingly rare. A ‘logbook loan’ is a type of loan that is granted generally to individuals in severe financial difficulty where other sources of borrowing are not available. Typically, the loan will have a very high APR (rates of up to 500% are not unknown) and, with punitive charges for missing payments, etc., the amount required to be repaid is often well in excess of the original loan. The loan is secured on the borrower’s vehicle through a bill of sale transferring ownership of the vehicle to the lender. Where the official receiver encounters a logbook loan, or similar, they should check that the bill of sale on which the transfer is registered with the court (following the guidance in chapter 32). If it is not, the lender will have no security over the vehicle and it may be dealt with normally. If the bill of sale is registered, the official receiver should treat the vehicle as one with hire purchase. Depending on the nature of the arrangement entered into by the bankrupt, or the manner in which the account was managed by the lender, the official receiver should also consider whether the agreement might be challenged as an extortionate credit transaction (see chapter 32).
27.31 Lease agreements
A lease agreement generally gives the person leasing the vehicle no ownership rights over the vehicle, which remains as the property of the lessor at all times. Lease agreements are most often encountered in a trading case, but are not unknown otherwise.
Generally, a lease agreement will give the lessee exclusive rights to use the vehicle for a set period (normally, between 2-5 years) in return for a fixed, monthly payment. This right would pass to the official receiver as liquidator or trustee but, subject to any ‘right to buy’ agreement (see paragraph 27.33), it is unlikely to be of any benefit to the estate. In such circumstances the official receiver should disclaim the agreement and inform them of the whereabouts of the vehicle. This should be done within 24 hours of the official receiver becoming aware of the location of the vehicle.
27.32 Motability scheme agreements
The Motability Scheme enables disabled people to lease a car, powered wheelchair or scooter by using their government-funded mobility allowances. An individual is able to exchange their allowance for a mobility package. Payments to Motability are made directly by the Department for Work and Pensions. The right to receive these benefits is personal to the individual. As the official receiver is not capable of fulfilling the eligibility criteria it is considered that this renders the contract with Motability personal to the bankrupt and therefore not capable of vesting.
As neither the vehicle nor the lease contract with Motability forms part of the bankruptcy estate the official receiver has no interest in the vehicle.
27.33 Lease agreement with an option to purchase
At the end of a leasing period, the vehicle will generally be returned to the leasing company, but there may be a clause in the agreement that gives the lessee the right to purchase the vehicle (sometimes at a pre-agreed price). Subject to any express term in the agreement that right will pass to the official receiver as liquidator or trustee.
In deciding whether to take advantage of this right, the official receiver should consider the value of the vehicle against the price being asked by the leasing company. In the likely event that the vehicle is worth less than the amount being asked for, the official receiver should follow the advice in paragraph 27.27 regarding disclaimer.
27.34 Hire agreements
A hire agreement is an agreement to rent a vehicle for a short period of time (generally, less than 30 days). The person hiring the vehicle has no ownership rights over the vehicle and, whilst the benefit of the agreement will pass to the official receiver as liquidator or trustee, the agreement is extremely unlikely to be of any value. Where an insolvent is hiring a vehicle at the date of the making of the order, the official receiver should disclaim the agreement and inform them of the location of the vehicle. This should be done within 24 hours of the official receiver becoming aware of the location of the vehicle.
27.35 Vehicles subject to employee loan scheme
A number of motor manufacturers operate employee car loan schemes as benefits to their employees. As only employees of the manufacturer are eligible to join the scheme and membership will terminate if the employment with the manufacturer ceases, the membership is considered to be personal to the individual member and will not pass to the official receiver as trustee.
In general, these schemes give the member an opportunity to purchase a car by means of a 12 month rental period with an option to buy at the end of the period. The agreement will state the terms under which the manufacturer can continue to exert control of the car during that initial period – which may include a clause terminating the agreement on bankruptcy.
27.36 Action to be taken with regards to a vehicle subject to an employee loan scheme
If the scheme agreement is in the initial ‘pre-purchase’ period (normally 12 months), the official receiver need take no action as regards the vehicle as it is not, at that point, property of the bankrupt.
If the agreement has passed that initial period and the bankrupt has taken the option of purchasing the vehicle, the official receiver should deal with the vehicle in the usual way as an asset of the estate.
If the agreement passes the 12 month period during the period of bankruptcy and the bankrupt exercises the right to purchase, the official receiver should consider claiming the vehicle as after-acquired property, following the guidance in chapter 36.
27.37 Sale of vehicles with realisable value
Where a motor vehicle has realisable value, no third party interest and is not exempt (see chapter 24), steps should be taken to dispose of it as soon as possible by way of a sale. As a vehicle is potentially a source of liability, the official receiver, as liquidator or trustee, should take steps to realise the vehicle without delay. This is the case even if a liquidator or trustee other than the official receiver is likely to be appointed. Any sale by the Official Receiver will need to be made through agents and so the Official Receiver will also need to consider the costs of realisation (see following paragraph) in determining how to deal with the vehicle.
27.38 Vehicle not to be sold at a loss
The official receiver should ensure that the agents’ costs justify the sale and that monies are realised for the estate from any sale, otherwise the official receiver should consider the vehicle to be not worth the cost of realisation and deal with the vehicle in line with the guidance for dealing with vehicles with no realisable value.
27.39 The sale of a financed vehicle – consequences
Where the official receiver, as trustee, disposes of property not comprised in the bankruptcy estate where there are reasonable grounds for believing that they are entitled to dispose of that property they are not liable to any person in respect of loss or damage resulting from the seizure (except insofar as it can be shown the loss resulted from negligence) [section 304(3)].
Where a vehicle is subsequently found to be on finance and this was not known to the official receiver at time of sale despite all efforts to establish the correct position (the agreement was not registered on HPI (see paragraph 27.22), for example), the sale proceeds (less the official receiver’s costs of sale) should be submitted to the finance company.
27.40 Sale to party introduced by director or bankrupt
It is possible for the sale of a motor vehicle to be effected to a third party introduced by a director or bankrupt, but the sale should be conducted through agents.
In such a case, it is important that the administration of the case is not delayed unreasonably by negotiations regarding the sale, or the provision of paperwork regarding the sale and, where there are delays, the official receiver should not hesitate to instruct agents to sell the vehicle to another buyer.
27.41 Offence of selling an unroadworthy vehicle
It is a criminal offence for a person to sell or supply, or to cause or permit the sale or supply, of a vehicle which is in an unroadworthy condition [Road Traffic Act 1988, section 75].
The seller must be able to satisfy a court that they actually believed, at the time of the sale, that the vehicle was in a condition in which it might be used lawfully, or that the vehicle was not going to be used until it had been made lawful [Road Traffic Act 1988 section 75(6)(b)].
An offence is not committed where, in the course of trade or business, a person sells an unroadworthy vehicle in circumstances where they made the purchaser aware of the unroadworthy condition of the vehicle and the offence of using such a vehicle. Such an exception would not be available to the official receiver, but would be available to their agents.
27.42 Change of registered keeper
If the sale of the motor vehicle results in a change of keeper (the person named as keeper on the V5) it will be necessary to inform the DVLA [Road Vehicles (registration and Licensing) Regulations, regulation 22].
The agents appointed to deal with the sale of a motor vehicle should be instructed to deal with this.
27.43 Insurance to be cancelled following disposal
Assuming there is no outstanding claim in relation to the policy, any insurance taken out by the company or the bankrupt over a vehicle should be cancelled as soon as the vehicle is disposed of and any unexpired premium paid should be recovered from the insurance company.
If the vehicle is being transferred to a third party introduced by the bankrupt with the intention that the bankrupt will continue to use the vehicle, the unexpired portion of the insurance should be taken into account when negotiating the sale, and it will then not be necessary to have the insurance cancelled.
Likewise, any insurance taken out by the official receiver over the vehicle should be cancelled in accordance with the guidance in chapter 14.
27.44 Disposal of vehicles with no realisable value – general
Even though a vehicle has no realisable value, it is not possible to simply abandon the vehicle as there are obligations on the owner of a vehicle (such as the obligation to tax and insure the vehicle) which, if not complied with, could result in a liability being incurred by the estate or the official receiver personally.
It is the case, therefore, that the official receiver must take positive action as regards the vehicle – which, in the vast majority of cases, will be to arrange for the vehicle to be scrapped.
27.45 ‘End-of-life’ vehicles and statutory requirements
The basis on which ‘end-of-life’ vehicles (this is what vehicles with scrap value only are known as in the legislation) are to be dealt with are set down in law, in the Regulations [The End-of-Life Vehicles Regulations 2003].
These Regulations became fully effective on 1 January 2006 and have the effect of ensuring that the UK meets requirements in European agreements for the prevention, reduction and elimination of pollution caused by end-of-life vehicles.
27.46 Authorised Treatment Facilities
ATFs are the only facilities where an end-of-life vehicle can be disposed of legally and properly.
Whilst ATFs are only obliged to take complete vehicles, given the high price of scrap metal it is likely that official receivers will be able to negotiate the removal and disposal of vehicle parts or parts of vehicles, if required.
27.47 Appropriate circumstances for a disclaimer
Given the comprehensive facility to dispose of a vehicle provided by ATFs it is extremely unlikely to be necessary to issue a disclaimer (see chapter 42) of a vehicle (as opposed to a vehicle finance agreement). That said, there are very limited circumstances where such a disclaimer will be appropriate, as follows;
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the vehicle has no realisable value, is on private land not owned or leased by the insolvent, and the owner of the land is refusing access to the vehicle without the payment of storage charges (or similar), or,
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the vehicle has no realisable value and has been abandoned overseas (subject to the guidance in paragraphs 27.49 and 27.50), or
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the vehicle has been stolen and any related insurance claim has been made (see paragraph 27.7).
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where the official receiver has been unable to obtain control of the vehicle and the cost involved in releasing it outweighs the value of the vehicle. For example, where a vehicle has been impounded with a cost for release.
27.47 Service of notice of disclaimer
Notice of the disclaimer should be served on the DVLA and the owner of the land on which the vehicle is stored.
27.48 UK registered vehicle left overseas
Where the bankrupt claims that he has left a UK-registered vehicle overseas, it is unlikely to be worth the cost of recovering the vehicle to this country for sale. Many EU countries have schemes to scrap ‘end-of life’ vehicles similar to those in the UK and the official receiver may be able to take advantage of such a scheme. If the official receiver considers that the value of the car warrants a local sale, they may wish to consider employing a local agent to deal with the sale.
Otherwise, the official receiver should ask the bankrupt to confirm that the DVLA has been notified that the vehicle has been permanently ‘exported’. If this has not been done the official receiver should carry out this process themselves. The official receiver may then issue a disclaimer of the vehicle with a copy of the disclaimer and certificate of export being served on any person with control of the vehicle in that other country.
27.49 Foreign registered vehicle left overseas
Where the bankrupt claims that he has left a foreign registered vehicle overseas, it is unlikely to be worth the cost of recovering the vehicle to this country for sale. If the official receiver considers that the value of a car overseas warrants a local sale, they may wish to consider employing a local agent to deal with the sale and should seek advice where required.
Otherwise, the official receiver may issue a disclaimer of the vehicle with a copy of the disclaimer being served on any person with control of the vehicle in that other country.
27.50 Refund of road fund licence
Where a vehicle is to be disposed of by an ATF, the official receiver should consider claiming a refund relating to the unexpired portion of the vehicle road fund licence. If the value of the unexpired portion is worth claiming, the official receiver should apply for a refund.
27.51 Insurance to be cancelled following disposal
Assuming there is no outstanding claim in relation to the policy, any insurance taken out by the company or the bankrupt over a vehicle should be cancelled as soon as the vehicle is disposed of and any unexpired premium paid should be recovered from the insurance company.
Likewise, any insurance taken out by the official receiver over the vehicle should be cancelled in accordance with the guidance in chapter 14.
27.52 Personalised registration numbers - general
A registration mark (to give it its official name) is issued to a vehicle on registration of that vehicle by the DVLA [Vehicle Excise and Registration Act 1994, section 23] and may be defined as the characters that are shown on the number plate of a vehicle.
Some registration marks have a transferable value in their own right. The ‘F1’ number plate, for example, was sold by Essex County Council in 2008 for £440,000. Not all registration marks are worth that sort of money and a more typical value is likely to be in the hundreds or low thousands of pounds. Registration marks that have a transferable value are called personalised or cherished numbers.
27.53 Considering the value of a registration number when dealing with a vehicle
When dealing with a vehicle owned by the insolvent, the official receiver should consider whether the registration number allocated to that vehicle has a value in its own right and, if so, deal with it as an asset. This would be the case even if the vehicle itself were to be treated as exempt property
It is not always obvious that a registration mark has a value, though if it looks unusual or does not fit the normal pattern for a registration mark then it may well do. Registration marks can be valued relatively easily.
27.54 Property status of a registration mark
A registration mark does not have a property status in its own right – rather it is the right to assign that mark that is the property that would pass to the official receiver as liquidator or trustee. In as much as a registration mark is owned at all, it is owned by the Secretary of State for Transport.
On the issue of a new registration, the person entering into the contract with the DVLA buys the right to assign the registration mark to a vehicle registered in their name or the name of another person (known as the ‘nominee’). The nominee has no rights to the mark until it is registered to their vehicle.
The person on whose vehicle the registration mark is allocated then has the right to transfer it to another vehicle in their name (when, for example, they buy a replacement car) or to another person.
27.55 Owner of the vehicle has the right to transfer the registration mark
Once a registration mark has been assigned to a vehicle, the keeper of that vehicle gains the right to transfer that mark to another vehicle. So if, for example, the vehicle is sold without the mark first being transferred to another vehicle kept by the original holder of the mark or being retained by the original keeper, the right to assign the mark will pass to the new owner of the vehicle.
In this context, it is important that the official receiver deals with a personalised registration mark on an insolvent’s vehicle before the vehicle is dealt with (which would include selling the vehicle, scrapping the vehicle or allowing it to be repossessed by a finance company).
27.56 Valuation of registration marks
Depending on experience and expertise, the official receiver’s normal agents may be able to offer an opinion as to the value of a registration mark. Alternatively, a company specialising in the sale of personalised registration marks will usually be able to value a mark.
27.57 Marketing of registration marks
Where the registration mark appears to have a significant realisable value and/or there is no ready purchaser, it may be necessary to market the mark for sale. The official receiver has various options in this regard:
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The official receiver may use their current agents if they are aware that they have experience/expertise in this area.
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A company specialising in the sale of personalised registration marks. The Cherished Numbers Dealers Association keeps a directory of members – who will value and buy marks.
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Sale to the director/third party introduced by bankrupt.