If you do not pay your taxes HM Revenue and Customs will consider taking enforcement action as detailed below:

1. Legally taking possession of goods (Distraint) – possession of goods for sale at  public auction,
2. Summary Proceedings in the Magistrates’ Court (or Sheriff Court in Scotland),
3. County Court proceedings,
4. Insolvency Proceedings (Personal Bankruptcy or Company Winding Up)

Legally Taking Possession of Goods is a process formerly called “Distraint”, whereby HM Revenue and Customs may take some of your possessions for sale at auction towards settlement of an unpaid tax bill. HMRC has the legal power to do this without any court order.

• the first visit may be from a member of HMRC’s “Field Force”, local staff whose initial function is to check the debtor’s address, and make face-to- face contact with them, so as to see if matters can be sorted out without resorting to enforcement

• the HMRC officer should act within the law, and you need not fear the illegal behaviour that is sometimes reported of bailiffs who carry out the process for other debts

• the HMRC officer cannot force his way into your premises without a court order, and such orders are very unusual

HMRC may consider legally taking possession of goods which you consider to be ‘tools of the trade’; particularly if you have no other assets. Vehicles can be particularly at risk.
 
The fact that HMRC can do this without a court order means that all threats of distraint should be taken very seriously.
 
Basic household goods and anything this is jointly owned are usually protected from such action.
 
Further guidance can be found on the HMRC website http://www.hmrc.gov.uk/factsheets/ef1.pdf 
 
Magistrates court proceedings
 
HMRC can start magistrates’ court proceedings against you if:

• You owe £2,000 or less

• you’ve owed it for no more than a year

You’ll get a summons before the hearing detailing what you owe and where and when the hearing will be.
 
If you’re able to pay what you owe you won’t have to go to court. If you disagree with the amount on the summons, contact HMRC. Magistrates can’t settle arguments about the size of your bill.
 
The magistrates can order you to pay your bill plus costs. If you don’t, they can send bailiffs to take your possessions.
 
Further guidance can be found on the HMRC website http://www.hmrc.gov.uk/factsheets/ef2.pdf
  
County Court Proceedings England and Wales only
 
All legal proceedings are stopped when you pay what you owe, so it’s advisable to pay as soon as possible.
 
If you can’t pay straight away, you have the opportunity to make an offer within 14 days outlining how you’ll be able to pay by a certain date or in installments.
 
If you disagree with the amount on the claim form, you can do so by following the instructions on the form you get from the issuing court. However you may have to go to court to give your reasons.
 
If you don’t reply or pay what you owe, you can be ordered to pay additional court fees and our costs on top of the claim form. Your details will be put on a Register of Judgments, Orders and Fines, which may mean you’ll find it more difficult to open a bank account or borrow money. But if you pay within one month of the judgment you can ask to have such an entry removed.
 
Further guidance can be found on the HMRC website http://www.hmrc.gov.uk/factsheets/ef3.pdf
  
Insolvency proceedings in the UK
 
Personal bankruptcy

Any sole traders or individuals in a partnership who fail to meet all requests to settle their debt can be petitioned for bankruptcy by HMRC.
 
If the court makes a bankruptcy order, it may mean that: 

• you can be forced to cease trading or you lose control of your business
• the court appoints someone to investigate your financial affairs
• your goods and/or assets are sold to pay the debt (plus costs)
• you may be unable to obtain credit over a certain amount
• future income is used to settle current debts

 
Further guidance can be found on the HMRC website http://www.hmrc.gov.uk/factsheets/ef5.pdf
  
Winding up your company
 
HMRC may petition the court for the winding up of incorporated companies and partnerships that fail to pay their debts.
 
If the court makes a winding up order, it may mean that:

• your company/partnership is forced to cease trading or you lose control of your     business
• goods and/or assets are sold to pay your debt plus costs
• the court appoints someone to investigate your financial affairs
• you may be disqualified from acting as a company director

Further guidance can be found on the HMRC website http://www.hmrc.gov.uk/factsheets/ef6.pdf