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HMRC internal manual

Debt Management and Banking Manual

Enforcement action: distraint: after the levy: Administrative Receiver (AR) appointed following levy

If you discover an AR has been appointed by a debenture holder and the case has been passed to the auctioneer, but the sale has not yet commenced:

  • liaise with the auctioneer
  • ensure he takes no further action until you have dealt directly with the receiver
  • ask the AR to send you a copy of the debenture under which he was appointed
  • confirm the distrained goods are covered by the floating charge (DMBM655260)
  • check the details including the date the charge was created
  • confirm that it has been registered with the Registrar of Companies at Companies House (the company should hold a ‘certificate of registration’ provided by the Registrar).

If the AR claims they are secured by the fixed charge, ask him to point out the relevant clause he considers the goods are covered by. If any items you have seized are covered by the fixed charge release those goods from your distraint.

However, where you are satisfied that distraint was levied on goods which were subject to a floating charge at the time of the levy, tell the AR that the distraint will be completed as quickly as possible, and that either:

* any excess following sale will be refunded
* any deficiency will be claimed in the receivership.


The administrative receiver may ask you to withdraw the distraint. For example it may be intended to sell the business as ‘a going concern’ and the existence of HMRC’s distraint might jeopardise this.

If you believe that the AR will realise more for the goods than you will by sale you may agree to release the goods and withdraw the distraint only if the administrative receiver gives an undertaking confirming that the sale proceeds will be paid to HMRC.

Write to the AR stating that the undertaking should be on headed paper and contain the following suggested wording:

“In return for you giving up possession of those assets bound by the distress, I undertake to:

* keep a separate account of the proceeds of sale of those goods in the winding up or administrative receivership
* pay those proceeds over to you up to the amount required to settle the debts for which the distress was levied, together with the costs of the distress.

Signed: Liquidator or Administrative Receiver”

On receipt of an acceptable signed undertaking, you should:

  • write to the AR:

    • confirming that the distraint has been withdrawn
    • say that the Department’s claim will be lodged as soon as possible
  • ask the auctioneer to return your papers and then
  • transfer ownership of the case to ICHU.

If the undertaking is not returned, you should instruct the auctioneer to complete the distraint.