Bailiffs and enforcement officers are appointed by a creditor to recover money that a person or a business owes them. A creditor will usually already have tried to recover the debt without success before employing a bailiff or enforcement officer to collect the debt on their behalf.
There are different types of bailiffs with varying powers, so who collects the debt from you will depend on what they can take. However, there are some standard things you should be aware of in case a debt collector ever turns up at your business premisesMore on the different bailiff types
What can bailiffs do when they visit?
In the event of business debt, bailiffs do have the authority to take control of goods relating to your business which can be sold at auction to recover the amount owed.
On their first visit, bailiffs will try to establish whether you can afford to pay the debt. They prefer to accept payment from you rather than goods to be sold at a later date. In case the debt isn’t repaid, they will likely take a full inventory of the assets they would be allowed to sell.
Assets that can be easily removed tend to be considered first as payment before looking into taking larger items of property which can be cumbersome and costly for bailiffs to remove.
If you don’t or can’t afford to pay straight away, assets will be secured at the business premises by the bailiff until they can collect them. During this time, you cannot sell or remove the assets from the premises.
If you can’t afford to repay all the debt at once, bailiffs may allow you to pay in instalments. You may be able to continue to use your assets during this time to keep your business running. However, if you miss repayments, then assets totalling the debt’s value will be taken as payment instead.
Can a bailiff force entry into the business premises?
High Court Enforcement Officers (HCEOs), a type of bailiff, have the power to enter a business premise and can force entry on a first-time visit, even if they haven’t a written list of goods.
In most situations, bailiffs will not look to break in as their aim is to speak to the company director to ensure they are aware of the debt and assess their affordability for repayment. However, if they decide they do want to enter to collect goods, they have that power.More on the powers of bailiffs
What can a bailiff take?
Bailiffs can only take certain assets from a business as a form of payment.
For a limited company, they can only take items that belong to the company as it is a separate legal entity from the directors who run it, meaning directors’ personal assets will not be affected.
From a limited company, a bailiff can take:
- Stock and work in progress (if they think there is value in it).
- Office equipment.
- Vehicles belonging to the company.
For sole traders, business debts are treated the same as personal debts; therefore, there is less distinction between business assets and personal assets that a bailiff can take. Bailiffs can also take things belonging to you personally or jointly owned between you and a partner or another person (although they are only entitled to use your share of the asset).
From individuals, a bailiff can take:
- Cash or cheques.
- Games consoles.
- Computers and tools worth over £1,350.
What a bailiff cannot take
Although HCEOs can take assets from indebted businesses, there are certain items they are not allowed to take.
From a limited company, bailiffs cannot take:
- Any goods that are leased or on a hire purchase agreement.
- Property which is being rented.
- Items that are not owned by the company (you are likely to need evidence to prove this).
- Assets essential to the business, such as tools up to the value of £1,350.
- Vehicles showing a disabled badge.
From individuals, bailiffs cannot take:
- Any items which are being leased or are subject to a hire purchase agreement.
- Property which is being rented.
- Any items which belong to someone else or a child.
- Basic domestic items such as a washing machine or cooker.
- Any assets used for work purposes under the value of £1,350.
Help to stop bailiffs
If a bailiff visits, fundamentally, it means there are problems within the business and creditors are owed money. This can be a big worry, so speak to our initial advisors, ready to offer you free, impartial advice with no obligation. We have the experience and expertise to help you through a difficult situation. Depending on the company’s circumstances, there may be rescue options available.
- Informal repayment arrangements.
If most of your debts are to HMRC, you can explore a Time to Pay Arrangement (TTP). TTPs are informal payment arrangements covering tax-related debts. Both companies and individuals can apply, and repayment usually lasts between six and 12 months. We have established a strong relationship with HMRC, putting us in an ideal position to negotiate favourable repayment terms.
More on Time to Pay Arrangements
- Formal repayment arrangements.
If the debts are to multiple parties and your company would be viable without its burdensome debts, you can explore a formal repayment arrangement to repay your liabilities in affordable instalments. A Company Voluntary Arrangement (CVA) pauses creditor pressure while the company repays what it can afford monthly over five years. A similar arrangement exists for individuals and sole traders called an Individual Voluntary Arrangement (IVA).
- Restructuring the limited company.
Sometimes, repaying the debt in instalments won’t be viable. Administration may be a more suitable option if creditor pressure is high and from multiple parties. The process involves a licensed insolvency practitioner takes control of the company while making the changes in preparation to sell it, and all creditor pressure is frozen for the duration.
More on administration
- Closing the company.
If the company’s debts are so severe that repayment isn’t feasible or even possible, it might be better to close the company down in an efficient manner. Insolvent limited companies can close via a Creditors Voluntary Liquidation (CVL). These pause all creditor action while the company closes through a structured, orderly process. Once the company is closed, the remaining unpaid debts are written off, leaving the directors to start a new limited company should they wish to.
More on Creditors Voluntary Liquidations
There is a strict set of guidelines that bailiffs must adhere to regarding what they are allowed to take and when they are allowed to enter a premise. However, if a limited company, sole trader or partnership owes money to creditors, then bailiffs will legally be able to take certain goods and assets. If bailiffs are visiting your home or business, it is likely a sign of deeper-rooted issues, and you should act fast if you want to prevent things from escalating further.
Can bailiffs visit if the business is undergoing an insolvency procedure?
Most formal insolvency procedures, such as CVAs, CVLs and Administration, don’t allow creditors to pressure those in debt once the arrangements become active. As long as the agreed terms are adhered to, you are protected from further action from your creditors. This means that they will be unable to hold you liable for more than it has been agreed that you pay and cannot pursue you or your assets to cover the debt.Reducing creditor pressure for companies
Can debt collectors seize business assets?
Debt collectors do not have the same rights as HCEOs. Their powers are limited to reminding and requesting that you repay the debt they’ve been sent to collect. They can collect money for debts but cannot enter without being invited, force entry, or seize goods without the debtor’s permission.
Book a free telephone consultation with one of our initial advisers