It has been brought to our attention that HMRC may have changed their policy on distraint action in CVLs where they are given notice of a general meeting at which a winding up resolution is to be sought.
Historically HMRC have been prepared to stop any distraint action that has not been completed when they receive notice of the general meeting at which a winding up resolution is to be sought, but it now appears that they may have changed their policy. We have recently heard of a case where they decided to continue distraint action that had started after being given notice of the winding up resolution. They appear to be relying on the decision in Re Modern Jet Support Centre Limited, which indicated that section 183, which stops creditors from completing any execution or distraint once they have been given notice of a winding up resolution, does not apply to HMRC.
If this is approach is adopted by HMRC across all cases, they may continue any distraint action that has started and also start distraint action where they have given the company notice of their intention to do so, even after being given notice of the winding up resolution.
As a result, when acting as advising member you should take steps to ensure that you obtain information from the instructing directors about any ongoing distraint action and threats of distraint action by HMRC so that you can take appropriate steps to preserve the company’s assets for the benefit of the creditors as a whole. Such action could include obtaining instructions from the Board of Directors to appoint agents to remove the company’s assets or using the Centrebind process.
