To obtain a walking possession order, a trade creditor must first get a judgment in the county court. They will then take action using a county court bailiff. Or they may enforce it via the High Court using a High Court enforcement officer (also called an HCEO; they used to be called High Court Sheriffs).
HMRC and commercial landlords can seize tenants’ assets without first seeking a county court judgment in order to recover overdue taxes or rent, respectively (see our guide to the rights of commercial landlords and new changes to the law). These are the only two situations where notice and an appointed bailiff are not required (see changes to the distraint laws).
In all cases, the enforcement agent will need to gain peaceful entry to the premises and they do not need to physically remove the assets in order to seize them. In fact, the Lord Chancellor has stated that he prefers if the goods are left at the premises.
Instead of removing items, the enforcement agent does a walking possession order. Goods are only removed when the enforcement agent deems it necessary to safeguard them.
What happens when a walking possession order is issued?
When a walking possession order is issued, it provides an agreement between the enforcement agent and the debtor. It states that the goods have been possessed and that they will remain in the agent’s custody until the debt and all costs have been paid.
Once a walking possession order is issued, debtors may not sell or remove the goods, nor may they let anyone else do so. If goods held under a walking possession order are sold, the enforcement agent can seize them from the purchaser, even if the purchaser was unaware of the situation.
If the enforcement agent seizes goods that do not belong to the debtor or are under a hire-purchase agreement, then the third party needs to provide evidence of this to reclaim the items from the walking possession order.
Once the walking possession order is signed, the enforcement agent will leave a copy with the debtor. The walking possession order also establishes permission for agents to re-enter at any time, as they may need to inspect or remove goods. The agreement also allows re-entry by force if necessary.
Do you have to sign the walking possession order?
If the debtor refuses to sign the walking possession order, the enforcement agent can obtain a signature from any responsible person at the premises.
If no one will sign it, then the enforcement officer will probably remove the goods to safeguard them, but they may require an indemnity from the claimant before doing so.
It is important to remember that enforcement officers do not want to remove goods; they simply want to get paid their commission for the successful collection of the debt.
To convince you to pay, they will try to put you under as much pressure as possible. Always remain calm and courteous and seek help from a professional who knows how to deal with walking possession orders.
Helping you avoid walking possession orders – and deal with them
At 4R Business Recovery, we provide reliable advice and assistance with all sorts of debt problems, including walking possession orders. We work closely with our clients to ensure that the best choices are made for the business and the stakeholders.
To find out more about how we can help you avoid walking possession orders, contact us today. We can also deal with county court bailiffs and High Court enforcement officers on your behalf to work out a satisfactory arrangement and halt any further action.
Before the court can issue a warrant, the defendant must have done either for the following:
- Failed to pay the amount he or she has been ordered to pay.
- Fallen behind with at least one of his or her payments.
The County Court bailiff can get back any amount up to £5000. (This does not apply if you are enforcing an agreement regulated under the Consumer Credit Act 1974.) You cannot ask the County Court to issue a warrant for more than £5000 but you can transfer the judgment to the High Court if the warrant is for more than this. If the amount owed is £600 or less, you cannot ask the Enforcement Officer to try and get your money back. If the amount owed is between £600 and £5000 you have the choice of issuing a warrant in the County Court or in the High Court.
Learn more here – www.eca.gov.uk
If this is the first time you’ve had tax compliance problems or arrears, and only need a time to pay arrangement that lasts between three to six months there’s a good chance you’ll be granted a time to pay arrangement by HMRC, without having to prepare detailed cash flow proposals.
HMRC will only agree to 100% repayment over a fairly short time period, but that might be all you need, so approach HMRC’s Business Payment Support Service (BPSS) and ask for a time to pay arrangement The sooner you do this the better.
Time to pay arrangements over 6 months can be tricky to get approved, HMRC biggest concern is not how long it takes you to repay the debt but whether or not you are going to continue to accrue debt. HMRC are as concerned about stopping insolvent companies accruing future tax debts and using tax revenue to support short term cash flow as they are about recovering tax arrears. This often frustrates directors who simply don’t understand why HMRC have rejected offers to repay over time.
For example, if you are going to deregister for taxes then HMRC will probably have no problem with you repaying the debt over 12 months. However, if you’re going to continue to trade you will probably need to provide evidence in support of your proposal such as a cash flow to show that you can manage to pay the outstanding liability and pay your continuing tax obligations as and when they fall due.
However, it’s important, to be honest, and prepare thoroughly. Draw up a detailed twelve-month cash flow document to identify what money is coming in and out, plus a business summary. You will need to submit these to HMRC to demonstrate you can afford the payments.
If you need 12 months or longer not only provide a detailed cash flow but offer to make a weekly DD payment. 4R Business Recovery has successfully negotiated 15 months to repay £56,000 of VAT but the client paid £1,000 weekly by DD.
Even more importantly, make sure this is the strategy you can afford. We always advise our clients to be consistent in their approach. You don’t want to pay 10 months of a time to pay arrangement and then find you can’t continue. If the arrangement fails, HMRC will still seek to wind up the company.
Top Tip #2
Get professional help now to independently assess your business performance and free up cash flow. There is very little point struggling with a TTP arrangement for six months, with all the stress of cash flow becoming tighter and tighter. Your business may need to be restructured now, and if you work with a Business Turnaround Specialist like 4R we can help restructure the business and keep you in control but significantly reduce the company debts, improve profitability and generate positive cash flow.
Ask 4R Business Recovery to prepare a detailed cash flow and time to pay arrangement on your behalf. We are experienced in working with HMRC – you stand a better chance of securing a time to pay arrangement if the proposal is professional and backed up by us.
If in doubt, call us on 00800 0385 140 for advice. We’ve helped hundreds of businesses deal with HMRC debts and tax arrears. If you’ve got a problem with the tax man, we offer a free consultation to talk things through.
HMRC are as concerned about stopping insolvent companies accruing future tax debts and using tax revenue to support short term cash flow as they are about recovering tax arrears. This often frustrates directors who simply don’t understand why HMRC have rejected offers to repay over time.
If you ignore the tax debt, HMRC will take action to recover it and close the company down. As explained above, this could have a significant impact on the directors who may be held personally liable.
If you can make a good case by demonstrating clearly that the business can afford to make repayments and can make weekly payments by DD then HMRC may agree to loner than 12 months, but as a rule, they will only grant TTP arrangements of between 3 and 12 months.
If you need longer than 12 months for what ever reason then you should consider a formal insolvency procedure, such as a Voluntary Arrangement, this will help to restructure your debt and allow you to continue to trade and meet your ongoing creditor obligations.
A Voluntary Arrangement will prevent past creditors from taking any legal or recovery action against the company and all creditors will be bond by this whether they consent or not.
A CVA (Company Voluntary Arrangement) or an IVA (Individual Voluntary Arrangement) may be a better solution than a TTP as it allows you to negotiate with all your creditors. Time to pay arrangements are relatively short term, typically 12 months, but a CVA usually lasts longer – between 1 and 5 years. When a company is insolvent with tax arrears, a winding up order or liquidation by HMRC can result in directors being made personally liable and subject to Directors Disqualification Orders (DDO’s). Directors’ drawings, dividends and pay can all come under close scrutiny. HMRC are increasingly pursuing directors, but personal liability can be avoided if a Company Voluntary Arrangement can be agreed with creditors. 4R are in the business of second chances and we believe a CVA is an excellent solution for companies confronted with tax arrears. Watch the 4R video on HMRC debts for more information.
If the business isn’t viable anymore, you may want to liquidate and walk away. On the other hand, you may want a second chance. We can assist you in reviewing your current situation and provide options for the old insolvent company, including creditors voluntary liquidation and pre-pack administration. You can then purchase the company’s assets, goodwill and intellectual property rights to create a new phoenix company. This allows you to write off the company’s debts – including money owed to HMRC.
By engaging business turnaround and rescue professionals such as 4R, and or licensed insolvency practitioners, you are acting in the best interest of your creditors – you have acknowledged the problem and sought professional guidance on the solutions available. If that solution is a Company Voluntary Arrangement (CVA), then 4R and the insolvency practitioner will be working with all your creditors to reach an agreement which is a better outcome for all stakeholders than a liquidation. The insolvency practitioner supervises and manages the repayments and steps in the shoes of all creditors. If the decision is to liquidate, the cost is borne by the company – HMRC are spared the expense of a winding up petition, which would be borne by the tax payer. At the end of the day, HMRC will work with us because we offer a professional solution to tax debts.
Top Tip #2
Get professional help now to independently assess your business performance and free cash flow. There is very little point struggling with a TTP arrangement for six months, with all the stress of cash flow becoming tighter and tighter. Your business may need to be restructured now, and if you work with a Business Turnaround Specialist like 4R we can help restructure the business and keep you in control but significantly reduce the company debts, improve profitability and generate positive cash flow.
Ask 4R Business Recovery to prepare a detailed cash flow and time to pay arrangement on your behalf. We are experienced in working with HMRC – you stand a better chance of securing a time to pay arrangement if the proposal is professional and backed up by us. We’ve helped hundreds of businesses deal with HMRC debts and tax arrears. If you’ve got a problem with the tax man, we offer a free consultation to talk things through. Call now on 0800 0385 140 if you want to raise finance to manage an HMRC debt.