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HMRC internal manual

Debt Management and Banking Manual

HM Revenue & Customs
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Enforcement action: distraint: after the levy: payment after the case has been handed to the auctioneer

Payments made after you have handed the case to the auctioneer

If the debtor pays, in full or part, after you have handed the case to the auctioneer, do not accept it. Instead, refer the debtor to the auctioneer.

If you receive any payment direct from the debtor (for example where they have paid direct to Banking) tell the auctioneer immediately.

Where payment covers the debt and levy costs but the auctioneer has incurred further costs follow the guidance below in the paragraph “Removal and appraisal fees”.

A part payment should be allocated first to enforceable costs. Where your distraint includes a number of HODs allocate the net balance on the basis of the principles set out in DMBM210110.

If any balance remains outstanding, the auctioneer will continue with the action.

Defaulter pays the auctioneer before the sale

If the defaulter pays the debt plus all costs, fees and interest to the auctioneer after you have handed the case to him to arrange sale but before the sale commences, the goods should be released from distraint.

Your arrangements should ensure that the auctioneer will pay you the full amount collected from the debtor, including costs, fees and charges. Cheques collected from the debtor will be made payable to HMRC. The auctioneer will then invoice you monthly for payment of the costs, fees and charges.

If the auctioneer collects cash, he will give the debtor a receipt and pay you by cheque drawn on the auctioneer’s clients’ account.

Removal and appraisal fees

You should ask the auctioneer to collect the costs of removal and appraisal from the debtor alongside the levy and possession costs. HMRC’s view is that these costs are enforceable even where a sale does not take place and where the unpaid costs exceed £30, the distraint may be completed by sale for the costs alone. It should be rare for the auctioneer to invoice you for payment instead.

Where the auctioneer has made arrangements for contractors to remove goods and they are not needed because the debtor pays at the last minute, any costs and charges incurred in making those arrangements are considered as included in the reasonable costs of removal.

Returning the debtor’s goods

Where the goods have been removed from the defaulter’s premises before payment is made, it is the defaulter’s responsibility to recover and transport the goods back to their premises.