What are they and how should you respond?

A Scottish decree and diligence is the civil court route for debt recovery through the local sheriff court. A decree must first be obtained; then there are several diligence options available for a creditor to enforce against the debt against your business. These include:

How does a creditor obtain a Scottish decree?

After a creditor has exhausted the informal methods to pursue you for a debt, they may commence the decree process. This is done by sending a note to the local Sheriff court. The court due is £100, and is recoverable if the final decree is granted, making the process cost-effective. Once an application for a Scottish decree is issued, you have a short period to respond if you do not believe the debt is properly due.

When the sheriff court has granted the decree, it is returned to the applicant, confirming how much money is due and details of how interest should be treated. The creditor must then serve the decree along with a charge for payment. A charge for payment gives you 14 days, known as the induciae, to pay the debt. If the decree debt remains outstanding at the end of the charge for payment period, the creditor may commence diligence against your business through the above methods, which we will now explain.


Arrestment is a diligence process which is effective over assets held by third parties. This prevents the third party of the debtor from disposing of the assets without reference to the creditor. Trade creditors, generally, find this process efficient, as they do not need to serve a charge for payment before commencing the arrestment.

However, public bodies, such as councils or HM Revenue & Customs, must first serve a charge for payment before commencing the arrestment process.

In certain circumstances, creditors may commence arrestment in dependance, meaning they can apply for the arrestment before the decree has been finalised. This can only be done if they can prove assets may be dilapidated. Assets which can be subject to arrestment include:

  • Funds in the company bank account
  • Moveable assets
  • Assets in the hands of repairs, such as vehicles at a garage
  • Investment document
  • Debtor balances

Debtor balances and cash at bank are the most common forms of arrestment, as these are quickly realisable and there is no uncertainty about the value. Where a bank account is arrested, the sum of £494.01 must be left in the account after the deductions. The arrestee has a formal duty to respond to the creditor, confirming whether they have caught any assets. With trade debtors, if the creditor is aware of who your largest clients are, this can be crippling if they are unable to pay you the outstanding balances if the decree balance is large.

However, the amount retained by the debtor cannot exceed the amount due to the creditor.

The downside for creditors with arrestment is that the automatic release period is 14 weeks after the date the decree is finalised. This is the point funds will be transferred to the creditor. If your company commences winding up proceedings or other insolvency proceedings shortly after diligence has commenced, the goods arrested over will revert to the estate.

Alternatively, if you wish to allow the arrestment and be released from the decree, a voluntary mandate for release of the funds can be given to allow them to be paid ahead of the 14 weeks.

Attachment over goods

Attachment over goods is a form of diligence, which can be taken against moveable goods at your business premises. Unlike arrestment, attachment over goods can only be executed after a decree has been made final, and a charge for payment has been served and expired.

However, an interim attachment can be granted as a provisional diligence.
There are limits to when a Sheriff officer can attend your premises, between 8am and 8pm. If they have commenced attachment, but not finished by 8pm, they must leave your premises at this time. They can also not attend on a Sunday or bank holiday. However, there is an exception that they can attend outside of these hours with a court order. If your business is a bar, they could apply to attend at 11pm, around last orders to maximise what can be uplifted under this and a money attachment, as described below.

Attachment over goods will be carried out by a Sheriff officer from the Sheriff court. The Sheriff officer will enter your premises and make a list of items which will be subject to the attachment.

They will report to the Sheriff within 14 days. If the decree balance is outstanding at this time, goods will be uplifted and sold at auction. Any proceeds will first be used to pay the Sheriff’s fees and expenses, with the balance being paid to the creditor. Any items which do not sell will be delivered to the creditor, and they will own the asset.

As the process can escalate quickly, receiving a charge for payment is the time to act and seek independent advice if you are unable to pay the debt. It may be necessary to seek the court liquidation route, or an alternative insolvency procedure if the company debts are escalating.

Money attachment

Money attachment is very similar to attachment of goods, often executed at the same time. A sheriff officer will, again, enter your business premises. If they find any cash on the premises, they can immediately seize this towards the debt. Sheriff officers also have the power to “open shut and locksafe places”. This, essentially, means they can open cash registers and other lock boxes without a court order.

Companies particularly vulnerable to money attachment are retail sites and restaurants. Sheriff officers will aim to attend at the end of the business day, uplifting the full day’s takings.

A money attachment also includes any cheques payable to the company. The Sheriff officer will apply for a payment order to release funds to the creditor, enabling them to bank cheques payable to your business.

From the date of the attachment, you have 14 days to appeal against the attachment. The Sheriff will retain the monies for this time period. Grounds for appeal include:

  • The attachment is unduly harsh
  • The attachment was carried out incorrectly
  • The money is subject to third party ownership

Companies particularly vulnerable to money attachment are retail sites and restaurants. Sheriff officers will aim to attend toward the end of the business day and uplift the full day’s takings. If the company commences insolvency proceedings before funds have been paid to the creditor, these funds must be paid over the the liquidation or administration estate.


Inhibition is a form of preventative diligence, rather than an active form, such as arrestment or attachment. This can only be employed against your company if it owns any heritable property, i.e. land or buildings. The inhibition restricts the activities you can take in relation to the heritable property and prevents:

  • Granting further security against the property
  • Voluntary sale of the heritable property without first clearing the inhibition debt

It should be noted that inhibitions are registered against the entity and not individual items of heritable property. This can be crippling if you are a property developer, as the inhibition will affect your entire portfolio.

Third party purchases are not protected against the inhibition, and any transfer without the inhibition being dealt with are deemed voidable contracts. The inhibition does not allow the creditor to force the sale of the property, and will expire after 5 years and must be renewed.


The Scottish decree and diligence system is a very effective debt collection model and can cripple your business until the balance is settled. If you are receiving multiple threats of these actions, this is often a sign of insolvency and that you should seek professional advice.

Contact one of our BusinessRescueExperts for advice on how to deal with the situation. If you have already been considering formal insolvency, but are worried about the costs, there are ways these can be kept to a minimum as described here.