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HMRC internal manual

Debt Management and Banking Manual

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HM Revenue & Customs
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Enforcement action: distraint: introduction to distraint: some definitions used in this manual

Throughout this manual you will see terms that have a long established usage and provide a convenient means of conveying what would otherwise require a lengthy explanation.

The following `definitions’ may give you a fuller understanding of distraint. Do not be concerned if you find them ambiguous or contradictory as many people in the debt collecting profession confuse the various terms when talking about the same process. These are not strictly legal definitions, but explanations of the way that the Department interprets the expressions.

Definitions

Distraint or Distress The act of taking (seizing) movable property out of the possession of a defaulter to compel payment of the debt. It is a summary remedy that does not require the sanction of a court. The terms cover entry, seizure and impounding but not strictly ‘sale’, however in common use people take it to include the process of sale and there are legal authorities supporting this.
The terms ‘distraint’ and ‘distress’ are interchangeable. Whenever this manual refers to distraint or distress you should treat this as meaning one and the same process.    
     
  Levy To raise a sum compulsorily, for example by distraint. Technically, ‘levying’ includes the act of sale but it is often understood to mean the process of seizure only.
  Seize It is, generally accepted that seizure commences when a distrainor indicates by pointing to, touching, or picking up an asset that it and other goods have been seized. Seizure is not complete until the goods have been listed on an inventory.
  Impounding goods The distraining creditor takes possession - but not ownership - of the goods. Impounding changes the status of goods by placing them in the ‘custody of the law’. Ownership of the goods remains with the debtor, but the debtor’s rights are limited while the goods are impounded.
  Effects These are the moveable and saleable goods on which you can distrain.
  Possession ‘Possession’ is broadly interchangeable with ‘impounding’. Goods are taken into possession by the distrainor either physically, as in ‘immediate removal’ and ‘close possession’ or, more commonly, under a walking possession agreement (DMBM655890).

 

Note: There is a common misunderstanding that distrained goods ‘belong’ to the Department. This is not so. HMRC take possession but title to the distrained assets remains with the defaulter until sale at public auction, when title passes to the purchaser. The goods do not, at any stage, belong to the Department.

Debtors and defaulters

Unless otherwise specified, you should read any reference to debtors or defaulters in these instructions as meaning any customer, whether individual, partnership, company, unincorporated body, employer or trader, whatever type of debt they may owe.

Field Force

Reference to DMOs in this manual should be taken to include ‘Field Force’ (FF) and distraint officers to include Field Force collectors or officers. Reference to Debt Management Group Offices (DMGOs) should include the management structure under Field Force.