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Help and advice when dealing with bailiffs for limited company debt
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What are bailiffs' powers with limited companies in debt?
A limited company is a separate legal entity to the company director, so if a bailiff or enforcement officer is appointed to seize items, only possessions owned by the limited company can be repossessed.
If bailiffs have been appointed to collect a debt on behalf of one of your creditors, and you have been unable to reach an agreement, it is likely that they will visit your premises with a view to seizing goods.
This can be an extremely stressful time for you as a company director, but by understanding the authority and power that bailiffs hold, you can retain a degree of control over a potentially volatile situation. For this reason, it is advisable to seek professional advice about your company’s financial position well before the bailiffs are called in.
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Also known as enforcement agents, bailiffs can work for the courts, in a self-employed capacity, or for private bailiff companies. If you owe money to HMRC, they can appoint bailiffs without a court order, making the enforcement process much quicker.
It is worth remembering that debt collectors are not bailiffs, and do not have any specific powers of entry or seizure of goods, although some may claim to hold such authority.
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A bailiff’s role with regard to limited companies in debt, is initially to reach a repayment agreement with the debtor. Failing that, they will want to visit business premises with a view to taking control of goods to the value of the debt.
In order to do this legally the bailiff must be certificated, which means they have been CRB-checked and have lodged security with the court for £10,000. This security, or bond as it is also known, provides protection for all concerned should the bailiff disappear with any monies repaid.
You should receive seven days’ notice of a bailiff visit, via an enforcement notice. A visit from the bailiffs will normally take place between the hours of 6am and 9pm, but it could happen on any day of the week.
You should check that the bailiffs have proper identification when they arrive, and that they are certificated, which gives them the legal right to take control of goods if necessary. The first visit usually involves listing business assets for potential seizure, however, and is sometimes used to encourage debtors to repay what is owed without actually taking goods away.
There are certain instances when bailiffs can force entry to your business premises if they have not been in previously.
- These include: When a court has granted permission for bailiffs to enter, for example on behalf of HMRC
- High Court Enforcement Officers or bailiffs from the County Court are involved
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One of the benefits of operating as a limited company is that, in the main, the company is liable for its debts rather than individual directors. This means that bailiffs can only take goods belonging to the business, unless you have provided a personal guarantee for business borrowing.
During the first bailiff visit, a list of goods to be seized and sold at auction will be made. Sometimes these goods are left within the premises - perhaps locked away in a separate room.
This process alone may persuade you to negotiate harder for an instalment plan, whereby you repay the money in full. If so, you should be able to retain and use the goods listed, as long as you meet the terms and conditions of the new arrangement, and also sign a Controlled Goods Agreement.
If no agreement can be reached the bailiffs have the right to sell your goods at auction, but must provide seven days’ notice before doing so.
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Negotiating an affordable repayment plan is the best way out of this difficult situation, but you need to make sure that any offers you make are reasonable. If the company misses a single payment, the bailiffs are likely to seize the listed items and sell them at auction.
It is advisable to seek professional advice when you know your company is getting into debt. It leaves more options open, and reduces the risk of swift enforcement action if HMRC are involved.
If you are facing a bailiff visit and need advice on how to proceed, Real Business Rescue can provide professional assistance. We have extensive experience of this situation, and will ensure you are aware of your rights and options.
Call our expert team to arrange an initial same-day appointment free-of-charge. We will discuss the best way to deal with your immediate issue, and provide a reassuring presence in your dealings with the bailiffs.
Further Reading on What are bailiffs’ powers with limited companies in debt?
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