Can HMRC take my Company Assets?

Many company directors worry about what happens if they fall behind on VAT, PAYE or Corporation Tax. One of the biggest concerns is whether HMRC can seize company assets to recover unpaid tax debts.

Although the term for this: distraint is still widely used, it was replaced in England and Wales by the Taking Control of Goods (TCoG) procedure in 2014. Regardless of the terminology, the consequences can be severe. HMRC has the power to attend business premises, take control of qualifying company assets and ultimately sell them to recover outstanding tax liabilities.

Over the past few years, insolvency practitioners have observed a noticeable shift in HMRC’s approach to tax debt recovery. While there is no official policy confirming increased use of Taking Control of Goods, HMRC appears to be taking a firmer stance on businesses that fail to address mounting tax arrears.

So, is HMRC increasing enforcement action against company assets, and what should directors do if they receive a Notice of Enforcement?

HMRC Is Taking a Tougher Approach to Tax Debts

During the COVID-19 pandemic, HMRC adopted a relatively supportive approach to businesses facing financial difficulties. Payment deferrals, extended Time to Pay arrangements and greater flexibility helped many companies survive unprecedented trading conditions.

That position has largely changed.

Today, HMRC is under greater pressure to recover unpaid taxes and reduce the UK’s tax gap. As a result, businesses with outstanding VAT, PAYE and Corporation Tax liabilities are increasingly finding that HMRC is less willing to tolerate prolonged arrears or repeated defaults on agreed payment plans.

Companies that engage with HMRC at an early stage may still be able to negotiate a Time to Pay arrangement. However, directors who ignore correspondence or continually fail to meet agreed repayments are more likely to face formal enforcement action.

What Is HMRC’s Taking Control of Goods Process?

Taking Control of Goods replaced the old distraint procedure in England and Wales.

Unlike many commercial creditors, HMRC does not usually need to obtain a County Court Judgment before beginning enforcement to recover unpaid tax debts. Once the statutory process has been followed and the appropriate notices have been issued, HMRC enforcement officers can visit your business premises to seek payment.

If payment cannot be secured, they may take control of qualifying company assets, which can then be sold to reduce the outstanding tax debt.

This is often one of the final stages before HMRC considers even more serious recovery action, including a winding-up petition.

Why Are More Businesses Experiencing HMRC Enforcement?

Although HMRC has not published evidence showing an increase in Taking Control of Goods cases, there are several reasons why directors may feel enforcement activity has become more common.

The End of Pandemic Support

Many businesses accumulated tax debts during and after the pandemic. HMRC has spent recent years working through those arrears and is now pursuing unpaid liabilities more actively.

Greater Focus on Recovering Tax Debts

The Government continues to prioritise tax collection, with HMRC investing heavily in compliance and debt recovery activity. Businesses that previously experienced greater flexibility may now find HMRC escalating recovery action more quickly.

Faster Escalation

Many insolvency professionals report that HMRC is progressing cases more rapidly than in previous years. Businesses that fail to engage or repeatedly default on payment arrangements often move from reminder letters to formal enforcement in a relatively short period.

What Company Assets Can HMRC Seize?

If HMRC begins the Taking Control of Goods process, enforcement officers may be able to seize company-owned assets, including:

  • Commercial vehicles owned by the company
  • Plant and machinery
  • Manufacturing equipment
  • Office furniture and IT equipment
  • Stock and inventory
  • Business tools and equipment

However, HMRC cannot simply remove everything from your premises.

Assets owned personally by directors, leased equipment, goods subject to finance agreements and certain protected items may fall outside the scope of enforcement. Whether an asset can be seized depends on legal ownership and any security interests attached to it.

Does HMRC Always Remove Company Assets?

No.

The purpose of an enforcement visit is first and foremost to secure payment of the outstanding tax debt. In many cases, enforcement officers will seek immediate payment or agree an acceptable repayment proposal.

Where appropriate, HMRC may ask the company to enter into a Controlled Goods Agreement. This allows the business to continue using specified assets while making agreed payments towards the debt.

If the agreement is broken, HMRC can return and remove those assets without restarting the enforcement process.

A Notice of Enforcement Is Often a Sign of Wider Financial Problems

Receiving a Notice of Enforcement is rarely an isolated issue.

For many businesses, unpaid VAT, PAYE or Corporation Tax liabilities are symptoms of broader cash flow difficulties. Directors often focus on preventing HMRC from taking company assets, when the more important question is whether the business remains financially viable.

If tax arrears continue to increase despite your best efforts, it may be time to consider whether a formal business rescue or insolvency solution would provide a better long-term outcome.

What Should Directors Do If They Cannot Pay HMRC?

Ignoring HMRC is almost always the worst option.

The earlier you seek professional advice, the more opportunities you may have to resolve the situation before enforcement action escalates.

Depending on your company’s financial position, the available options may include:

  • Negotiating a Time to Pay arrangement with HMRC.
  • Restructuring debts through a Company Voluntary Arrangement (CVA).
  • Administration to protect the business while a rescue or sale is explored.
  • Refinancing or restructuring existing liabilities.
  • Creditors’ Voluntary Liquidation (CVL) where the business is no longer viable.

Every company is different. The most appropriate solution depends on its financial position, future trading prospects and the level of creditor pressure.

Don’t Wait Until HMRC Takes Control of Your Assets

Once HMRC has issued a Notice of Enforcement or enforcement officers have attended your premises, your options can become increasingly limited. While it may still be possible to negotiate with HMRC or prevent assets from being removed, delaying action almost always makes resolving the situation more difficult.

Seeking advice from a licensed insolvency practitioner at the earliest opportunity can help you understand your company’s financial position, explore the available rescue options and decide on the most appropriate course of action.

Early advice may enable you to negotiate with HMRC, protect the underlying business, safeguard employment and minimise the risks to directors if the company is approaching insolvency.

If you’ve received a Notice of Enforcement, are facing pressure from HMRC or are worried about growing VAT, PAYE or Corporation Tax arrears, don’t wait until enforcement officers arrive. Acting early gives you the greatest opportunity to resolve your tax debts before they result in asset seizure or compulsory liquidation.

Speak to BusinessRescueExpert Today

If your company is struggling with HMRC tax arrears, our licensed insolvency practitioners can provide confidential, impartial advice tailored to your circumstances.

Whether your business can be rescued through restructuring or requires a formal insolvency procedure, obtaining professional advice at an early stage is likely to leave you with more options and better outcomes.

Contact Business Rescue Expert today to discuss your situation and understand the solutions available before HMRC’s enforcement action escalates.

Frequently Asked Questions

Is HMRC increasing enforcement action against businesses?

While HMRC has not announced a formal increase in Taking Control of Goods actions, many insolvency professionals have observed a more proactive approach to recovering unpaid business tax debts. Businesses that fail to engage with HMRC or default on payment arrangements appear more likely to face formal enforcement than in previous years.

Can HMRC seize company assets?

Yes. Under the Taking Control of Goods procedure, HMRC can take control of certain company-owned assets to recover unpaid tax debts once the statutory enforcement process has been followed.

What is a Notice of Enforcement?

A Notice of Enforcement is a formal warning that HMRC intends to begin enforcement action if payment is not made or an acceptable payment arrangement is not agreed within the required timescale.

Can I stop HMRC taking company assets?

In many cases, yes. Acting quickly to negotiate with HMRC or seeking professional insolvency advice may help prevent enforcement or identify alternative solutions before assets are removed.

What should I do if my company cannot pay HMRC?

If your company cannot afford to pay its tax liabilities, seek advice as early as possible. Depending on your circumstances, solutions may include a Time to Pay arrangement, a Company Voluntary Arrangement (CVA), administration or Creditors’ Voluntary Liquidation (CVL).