DMBM656120 - Enforcement action: distraint: after the levy: auctioneer’s actions

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General

If the debtor has failed to pay the distraint, you should instruct the auctioneer to sell the goods as quickly as possible. You are not giving him authority to negotiate payment by instalments.

In practice, however the auctioneer may accept payment in instalments over a short period as a cheaper and more expedient alternative to sale but only where it will ensure full payment. A sale should not be deferred to allow for any such arrangement.

If the goods are of good quality and will be attractive to bidders, the auctioneer has every incentive to arrange a quick sale and the question of instalments should not arise.

Auctioneer’s actions

When you have handed over the case papers, comprising the inventory, photographs and details of accruing interest, your local arrangements should provide that the auctioneer will

  • open a file and undertake a preliminary risk assessment and evaluation of the case based on the documentation provided
  • contact the debtor promptly and
  • issue a letter to the debtor if appropriate
  • ensure that they have the original documentation before undertaking the appraisal
  • call at the debtor’s premises to
  • collect payment including interest added to the principal amount daily from date of levy until payment
  • carry out a full check and formal appraisal of the items on which distraint was levied (an appraisal is a legal requirement under TMA70/S61(5) for direct taxes. Indirect taxes Regulations do not require an appraisal in every case but for consistency this should continue to be standard procedure for every distraint)
  • warn of the consequences of non payment
  • undertake a full risk assessment to ensure that the items seized conform to modern day safety standards and can be removed safely
  • leave a letter for the debtor if not seen
  • form an opinion as to the most cost-effective method of removal and sale
  • telephone your office to check the payment situation (ask for an ‘RP check’) immediately before all strategic points in the process, such as removal and sale (DMBM615040)
  • arrange removal and sale, unless it is more beneficial for the items to be sold on site
  • advertise the sale giving maximum accessibility to potential bidders, including by internet and in specialist publications, where appropriate (lifted from auction sale)
  • make best use of modern technology, for example the Internet to advertise and illustrate the goods to best advantage to maximise the sale value particularly for specialist equipment or where realisations are improved by viewing articles in an assembled condition
  • arrange sale on site as appropriate
  • attend the removal to supervise the activities of any independent third party contractors
  • sell no more than is sufficient to cover the full debt plus all costs.
  • account for VAT collected on the sale

The distraint action for direct and indirect taxes is to be kept separate but there is no objection to the auctioneer selling distrained goods for either at the same sale.

Note: As your instructions are to appraise and sell speedily it follows that the auctioneer is not expected to make unnecessary and costly repeat visits.

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Reports of progress

Reminders are not to be issued to the auctioneer while the case is in his hands. As indicated above, offices will be aware of the progress being made as the auctioneer will telephone or call to check the payment situation at key points in the process, that is, appraisal, removal and sale.

Exceptionally, if the auctioneer has not completed the sale within 6 weeks of being handed the levy, he should provide a separate report. The sale should normally be concluded well within that period and if this is not possible the auctioneer should tell you. You are not passing the case to the auctioneer telling him he has 6 weeks to complete the sale.

(This content has been withheld because of exemptions in the Freedom of Information Act 2000).