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HMRC internal manual

Debt Management and Banking Manual

From
HM Revenue & Customs
Updated
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Enforcement action: distraint: after the levy: if your actions or ownership of the goods are challenged

Allegations of irregularity

Any allegation that your distraint is illegal or irregular must be given the personal attention of the higher debt manager. You should not give any impression that this view is correct without fully investigating the circumstances. You will find further information at DMBM656250.

Injunction

If a debtor takes out, or attempts to take out, an injunction or any other type of court order or decree in order to prevent the distraint, contact your higher officer immediately and they should contact our Solicitor’s Office for advice.

If ownership of the goods is challenged

Motor vehicles

For a number of reasons, despite the careful checks that you have made at the time of levy, debtors may deny later that they own the goods, particularly motor vehicles.

If the debtor claims he is not the legal owner of a motor vehicle or claims, despite having use of the vehicle, that it actually belongs to someone else, you should ask to see the insurance documents.

The real owner is the person who stands to lose financially if the vehicle is stolen or written off. No one else can insure himself or herself against that loss. The policy document will carry the insured’s name. The Certificate of Insurance is not enough; it simply confirms that the vehicle is insured.

If the insured is not the debtor, accept the third party challenge and release the vehicle from the distraint.

Third party claims to ownership

A third party may claim ownership of goods subject to your levy (DMBM655840). This may be under a financial agreement such as

* retention of title DMBM655250
   
* hire purchase DMBM655240
* conditional sale DMBM655240
* a fixed charge DMBM655260
* a Bill of Sale may be produced DMBM656060

If, having checked documentary evidence, you are satisfied that the claim is genuine, accept it and release the goods.

If you feel that the claim may be spurious, contact your higher officer for advice.

Another creditor claims priority

If another creditor attempts to claim priority over your distraint, for example a landlord may claim to have levied distraint already for rent, you should ask the creditor to put in a written claim accompanied by documentary evidence. On receipt, contact your higher officer for advice.

Goods already in the hands of the auctioneer

Any of the above challenges regarding ownership may be made, to you or the auctioneer, after the assets have been referred to the auctioneer but prior to sale. You should have an arrangement with your auctioneer that if he receives such a challenge he will liaise with you. Most cases will be referred to you to deal with although the auctioneer should retain the papers until you have decided how to resolve matters.