DMBM655500 - Enforcement action: distraint: preparing for distraint calls: special considerations before the distraint call
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The distraint process
When conducting distraint actions you should always follow the procedures summarised in the distraint or distraint (Northern Ireland) process map.
Evidence of effects
There should be some evidence that there may be enough distrainable effects owned wholly by the debtor (no third party financial interest) to realise
- all the costs (including those of appraisal, removal, storage and sale) and
- a reasonable proportion of the debt (DMBM655830).
Information of distrainable assets may be acquired from previous distraint calls or local knowledge. However, in practice the asset position may only become apparent following access to the promises on the actual distraint visit. The lack of precise knowledge should not preclude an attempt to levy where there is no reason to doubt there are distrainable goods.
Large business concerns
If you propose to levy on a large business concern where you think your action could close down the business or otherwise attract the attention of the media, you should seek authority to proceed from your Debt Management Group.
In this context a ‘large business concern' is not defined simply by number of employees or by monetary limits. It is relative, in that a large business concern in a small rural community may be much smaller than its counterpart in a large industrialised area. You must decide locally what in your area constitutes a large business concern, always being alert to the possibility of public criticism arising from your actions and the policy that the Department will not force a viable business into closure simply because of short-term difficulties.
Large money cases
Where you are dealing with a total debt exceeding £2 million and recovery proceedings are imminent you should contact your Grade 7 to discuss management of the debt.
Other office’s involvement
If you intend to distrain and you discover from the computer records or by notification that any other office is inspecting or auditing the customer, you should liaise with that office to confirm that you may continue your action.
For more information see DMBM655730.
Where VAS ask you to distrain
VAS (Voluntary Arrangement Service, EIS) may ask you to distrain where a Voluntary Arrangement case has failed (including where the debtor defaults on post-VA liability). If you are advised that there are both direct and indirect tax debts involved co-ordinate enforcement action and distrain in the normal way, levying on the larger debt first (or take other proceedings if distraint is not practical).
Distraint for employers’ in-year liabilities under Regulation 78 (P101)
Before carrying out a distraint call on an employer in a case where a form P101 has been issued you should ensure that you are fully conversant with the appropriate PAYE, NIC and student loan regulations. Regulation 78 Income Tax (Pay As You Earn) Regulations 2003 and equivalents refer.
VAT Securities
The Security Team may notify you that they are taking action in an indirect tax case that has been referred to you for enforcement. Their action will proceed independently of yours and you should continue your action.
However it is important that you are aware of each other’s actions and that visits do not clash.
MTIC Unit
This is a specialist indirect taxes group dealing with Missing Trader Intra-Community (MTIC) fraud (commonly known as “Carousel fraud”). The MTIC Unit may request cases for special treatment at any stage.
If the MTIC Unit (or the DMU on MTIC’s behalf) ask you to transfer the case and:
- if you have not commenced distraint, refer the case back to the DMU so they can refer it to the MTIC Unit
- if you have levied distraint, contact the MTIC Unit for guidance.