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HMRC internal manual

VAT Civil Penalties

Breach of Walking Possession Order: Calculation and notification of the penalty: Calculation of the penalty

A basic requirement before a penalty assessment is issued for a breach of walking possession order, is that the officer or a bailiff has attended the premises and confirmed that the goods were not available to complete the distress.

If you have identified a case which you feel qualifies for a Section 68 penalty you should consider the facts and you may find the following points helpful.

Factors which support the issue of a penalty

These include

  • The tax remains unpaid.
  • There are no other goods available to make a second distress visit worthwhile.
  • The estimated forced sale value of the goods removed by the trader is at least 10% of the debt.
  • The value of the goods removed exceeds £1000

Factors which oppose the issue of a penalty

These include

  • The trader is normally compliant and has not previously breached an agreement.
  • The estimated forced sale of the property removed or sold by the trader is less than 10% of the debt.
  • An un-guaranteed cheque offered in payment has been refused without being sent for special clearance.
  • Value of goods removed is less than £1000
  • There are goods available to make a second distress visit worthwhile.
  • The trader remits the proceeds of the sale of the items removed towards the settlement of the debt.
  • The trader pays the outstanding debt, charges and fees.
  • The goods are still on the trader’s premises but the officer or bailiff cannot gain access.

The rate of penalty

If the person in default is in breach of the undertaking contained in a walking possession agreement, he shall be liable to a penalty equal to half of the tax or other amount referred to as if it were tax due, for example, the amount for which distress was levied.


The issue of a penalty assessment is always subject to local management agreement orapproval.