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HMRC internal manual

Debt Management and Banking Manual

HM Revenue & Customs
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Enforcement action: distraint: carrying out a distraint: defaulter claims payment made or offers payment before levy

Defaulter claims that payment of the debt has already been made

If a debtor challenges the amount demanded on the grounds that payment, in full or part, has already been made ask for suitable evidence of this. If you are satisfied that the debtor is correct

  • amend and initial the form C204 accordingly, if prepared prior to your distraint call
  • continue the distraint action for any outstanding balance.

If the debtor cannot prove his contentions and you are satisfied that the debt is correctly due, levy distraint (DMBM655830).

Defaulter offers full payment before levy

If the defaulter offers payment in full on demand you should accept it, without asking for any distraint costs. Ask for payment by debit card wherever possible but if full payment by cheque is accepted do not levy distraint (DMBM655830).

Cheques are expressly included as an acceptable method of payment in HMRC’s published guidance, however if you consider that payment should only be accepted by debit card, in cash, or by bankers draft (for example a previous cheque from the defaulter has recently been dishonoured) you may refuse payment by cheque and levy distraint (DMBM655830).

If you find that the defaulter is continually paying in full on the distraint call, consider another method of enforcement.

Defaulter offers part payment before levy

If the defaulter offers only part payment because they are unable to pay in full

  • accept the payment (unless the criteria for refusing a cheque, above, apply) then
  • levy distraint for the unpaid balance(This content has been withheld because of exemptions in the Freedom of Information Act 2000) , if there are enough effects.

Regulation 78 and 13 (P101) cases - payment of a lesser amount offered before levy

Where in a P101 case you have demanded the specified amount and the employer offers you a lesser ‘actual’ amount, the employer is in practice asking you to accept a smaller figure in full and final settlement of a greater debt.

It is not inability to pay. It is attaching conditions to the payment and you are not obliged to accept payment with conditions attached.

Tell the employer that you decline the offer and that the amount now legally due is the full amount on the P101. Then levy distraint for the full P101 amount (DMBM655830).

It will help to demonstrate the legality of your action if you also hand the employer a certificate of debt as evidence of your debt (DMBM615420).