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HMRC internal manual

Debt Management and Banking Manual

Enforcement action: distraint: after the levy: proceeds of the sale

Payment following sale

When the auctioneer has collected the proceeds of sale, he will

  • deduct the costs of removal and sale (and appraisal if the auctioneer carried out this work)
  • pay the net amount to HMRC.

Net proceeds exceed the debt

Where exceptionally, the net proceeds of the sale exceed the debt and costs still outstanding, satisfy the distraint costs and the debt, including interest.

Where an SA POA has been increased as a result of a claim to adjust the POA or an indirect tax debt has been increased on appeal, after distraint was levied, allocate any surplus to that increased amount.

Any surplus remaining should be set off against any other outstanding debt and the taxpayer notified. Any excess after set off should be repaid to the debtor.

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Net proceeds leave a shortfall

If the net proceeds of the sale are less than the debt and costs still outstanding,

  • advise the defaulter by letter

    • stating that your distraint has been completed and
    • warning that you may take further recovery action to collect the amount remaining unpaid.

Direct taxes cases only

For direct tax debts move the work item to the C/W CCP worklist.

Indirect taxes cases only

Where the action is for indirect tax debts only, the DTO will

  • make the decision to take CCP
  • continue to have responsibility for the case until the CCP action is concluded
  • notify the DTO (Indirect taxes) of the change of enforcement method using the Outcome Report form
  • transfer the IDMS work item to the Bradford Enforcement Unit (BEU).

Combined debt cases

Where the distraint action is for both direct and indirect tax debts, the DTO will

  • commence CCP proceedings as appropriate
  • transfer the IDMS work items to the C/W CCP worklist.

Allocation of proceeds

Where your distraint includes a number of HODs allocate the net balance on the basis of the principles set out in DMBM210110.