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What is Tax Distraint?

Tax debt is one of the few things people cannot roll into an IVA, bankruptcy or debt management programme in the United Kingdom, and if you do not try to settle the debt through payment arrangements with the taxing authority you can find yourself in an interesting position. You could find the taxman at your door in an effort to collect the debt, and they are allowed to use a process called distraint to seize your property to sell at auction in order to pay your debt. The taxman does not need a court order to do this as they have the right under law to do this, but there is a certain procedure they have to follow.

  • The taxman cannot simply show up at your home without warning to seize your property. They are required to send you, the debtor, a letter warning that distraint action is about to begin. The tax collector will then show up to assess your assets and possessions to deem what is valuable and to be seized to pay off your debt. They can only visit your home between sunrise and sunset Monday to Saturday. They are not allowed to appear at your door on Sundays or on public holidays, and they do not need to make an appointment with you. They do not have to contact you beforehand at all to tell you they are coming. Tax collectors cannot force their way into your home and you have the right to refuse them entry. If you refuse them entry, they will need a court order to gain access to your home.

    Most of your personal possessions are eligible for seizure by the tax collector and they will make a list of these items with an estimated value of the items. They cannot take the following items: items essential for your job or trade if it keeps you from working; clothing; perishable foods; basic living items such as chairs and tables, cooking equipment, beds, etc.; and any item that is jointly or wholly owned by someone else.
Once the tax collector has made a list of the items they intend to seize, you are given five days to clear your debt or arrange some type of repayment agreements. If you fail to do either, the tax collector will come in and seize the items on the list and sell them at auction, usually for a fraction of what they are really worth. This means that there is the potential for your debt to not be fully cleared even after being issued a distraint order.

Anyone who receives a warning of distraint should immediately contact their local tax office as soon as possible so they can reach an agreement to pay the tax debt over a length of time that is agreeable to everyone. This will keep the process from progressing any further and you will be able to keep your possessions. Only one in a thousand distraint warnings actually result in the seizure and sale of property. You can also contact a tax debt specialist to get advice on the distraint order. They will help you make sure that the distraint is carried out in a fair way if you cannot avoid having your property seized.
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