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HMRC internal manual

Debt Management and Banking Manual

From
HM Revenue & Customs
Updated
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Enforcement action: distraint: carrying out a distraint: demanding payment before levy

General

Before you levy distraint you must have demanded payment (TMA1970/S60 (1) and S61 (1) or S1 1997/1431 Regulation 4(1)). You should satisfy yourself, by asking suitable questions, that for all the liabilities for which you intend to levy, the debtor received:

  • a written demand (including forms IDMS99, P101, distraint warning letters and DNIPs) or
  • in the case of Class 2 NIC, the certificate of debt was served at least 7 days previously.

Written demands can have been issued for each individual liability or just one written demand can have been issued for the total of the liabilities.

Demanding payment before levy

Having established that the debt has been demanded and the defaulter is aware of it you should then give the debtor a final opportunity to pay. You should

  • demand immediate payment of the full amount outstanding preferably by debit card
  • make sure that, where appropriate, you include interest to the date of your call.

If the debtor does not pay, they have then neglected, refused or failed to do so on demand and you can levy distraint (DMBM655830).

Time to pay (TTP)

If TTP is requested before you have levied see DMBM655820.

Doubts that a written demand was received

If you have genuine doubts about whether the debtor has had adequate warning, do not levy distraint. Instead, for all cases apart from those under Regulation 78 Income Tax (PAYE) Regulations 2003 [SI 2003/2682] or Regulation 13 Income Tax (Construction Industry Scheme) Regulations 2005 [SI 2005/2045], leave a further warning letter with the defaulter allowing seven days for payment.

For indirect taxes however, you may issue a Demand Note for Immediate Payment (DNIP) for a revised amount and continue with the distraint. This includes cases where you accept, or assist in completing a VAT 100 return, where the defaulter has declared an amount due different from that you are distraining for. In the case of a partnership the DNIP should name all the partners in addition to the trading name.

Regulation 78 and 13 (form P101) cases - P101D not received

If an employer or contractor claims not to have received form P101D, you should:

  • quantify there and then if possible
  • leave a warning letter allowing seven days in which to pay the overdue deductions.

If you cannot quantify the amounts and the employer does not pay voluntarily, leave another form P101D (marked `DUPLICATE’) for the same period and amounts.

Then, in either case, if payment is not made within seven days, make a further distraint call.