If your business is struggling financially and has big creditors, you may face bailiff action. In this blog, we’re looking at how to deal with bailiffs.
Dealing with financial difficulties can be overwhelming, especially when it comes to bailiffs and allowing them entry into your business premises. We’re here to help you understand your rights when dealing with bailiffs.
When are bailiffs instructed?
Usually, a bailiff is instructed once a judgement has been obtained. This judgement is used to confirm that a liability is due. This means you owe some money, they go to court and get a CCJ, and the bailiffs start.
However, HMRC works differently, as these liabilities don’t require a CCJ. Instead, their enforcement officers can attend a site following a demand or repayment.
When do bailiffs have the right to enter a property?
After a CCJ has been obtained (not HMRC), there are some rules. If the liability is labelled as ‘non-criminal’, the bailiffs cannot enter the property without permission unless they do so by peaceful entry. Peaceful entry can be recognised as entering through an unlocked door or open window.
If you have commercial rent or HMRC arrears, you’ll be interested to know that since 2014, a new statutory procedure has been in place. This is referred to as CRAR and means that there are dictations on how a landlord can recover rent arrears from a commercial property. This means there is no automatic right of entry, and they must give you seven days’ notice before coming in.
HMRC enforcement officers do not have to provide any documentation before attending the site to recover their money. However, they will only recover assets as a last resort. HMRC are more likely to obtain a Walk-In Possession Order over the company’s assets. When you sign this as a director, you can’t dispose of those assets without their consent.
Walk-In Possessions orders can also be obtained by a bailiff in respect of a CCJ liability.
What is a Walk-In Possession Order?
A Walk-In Possession Order is a list of goods (assets) that will be ceased unless you pay the debts owed from the business. Usually, you’ll be given a specific time period for when the debt needs to be re-paid.
Any goods listed on the order cannot be removed from the property or sold until the debt has been paid. For each day that the debt remains outstanding, you’ll be charged an additional amount of money.
What happens if goods or company assets are seized?
When a bailiff seizes goods, they are sold by auction to recover the cost of the bailiff and then the original liability. When goods are sold through auction, you receive a lot less than what they may actually be worth.
Bailiffs cannot remove goods that belong to a third party. This means that if no proof of ownership exists, they may choose to remove the goods until ownership can be clarified.
How to deal with bailiffs
If a bailiff turns up and gains entry to your premises, there’s little you can do. This highlights how important it is to seek advice early if there are any threats of bailiff action.
At 1st Business Rescue, we can negotiate with creditors on your behalf. We can try to remove the threat of any bailiff action or asset removal. If you need any information about bailiff action or you want to discuss your own situation, please don’t hesitate to contact us. We’re here to support you as the director.
Justin Barker
I’m Justin Barker, the Managing Director at 1st Business Rescue. I have over 25 years of experience providing insolvency advice to business owners.
I understand how challenging it can be when dealing with financial difficulties within your business. It’s easy to ignore the problem and hope that it disappears, but this is often the worst thing you can do. Our dedicated team is here to provide honest, valuable advice to help UK directors deal with their personal situations in the most appropriate way.
No case or circumstance is the same, but I can guarantee that I am there to give you the best advice.
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