The Taking Control of Goods Regulations, part of the Tribunals, Courts and Enforcement Act 2007, came into effect on 6th April 2014. The aim of these regulations was to bring conformity and clarity to the various forms of debt enforcement. The main changes to the existing law were:
- The enforcement process is now set out in four stages, each with defined fees.
- The first stage, the compliance stage, requires that High Court Enforcement Officers (HCEOs) must serve a Notice of Enforcement, giving the debtor seven days to pay.
- Tools of the trade are only exempt to a maximum value of £1,350.
- Vehicles must be immobilised for two hours before they can be removed.
- The debtor must be given seven days’ notice of a sale (increased from four days).
- The abortive fee, payable by the creditor when enforcement is unsuccessful, is renamed the Compliance fee and is triggered each time a Notice of Enforcement is served.
Four Stages of Enforcement
The new process of enforcement has made it very easy for debtors and creditors alike to easily follow the HCEOs actions, and also to calculate the costs.
Notice of Enforcement
This is perhaps the most controversial area of the reform as, from the creditors’ point of view, it gives the debtor the opportunity to take goods and hide them. On the other hand, sending the debtor a notice in good time will give them a last opportunity to pay, without incurring the full Sheriff’s fee (only the Compliance fee would be payable at this stage).
Tools of the Trade
Tools of the trade are now exempt up to the value of £1,350. These include things that are needed by the debtor to do their job/run their business, for example, tools, books and vehicles.
Immobilisation of Vehicles/Notice of Sale
Vehicles are immobilised for a period of 2 hours after which they can be seized (if the debtor hands over the keys initially, then there is no need for the 2 hour immobilisation period). After goods have been seized and are “controlled goods”, the debtor is given 7 days’ notice prior to their sale.
The HCEOs can return to the property to try and obtain further goods if the debt is not fulfilled. A shorter notice period of 2 days is required for a return visit, and this can be shortened by the court if it is believed that the debtor will try and dispose of goods.
Controlled Goods Agreement
Once the HCEOs have taken “control” of the goods, they need not physically take them then and there. A Controlled Goods Agreement (CGA) is drawn up, stating that goods cannot be sold on and, if they are, the HCEOs can enforce the agreement on the purchaser (whether or not they know of the CGA). The HCEOs can then re-enter and take the goods at any time, and can use force if necessary. It is a criminal offence for the debtor to intentionally interfere with goods taken into control.
Selling the Goods
Once seized and the relevant notice periods have expired, goods will be sold at auction. In reality, very few cases ever require the seizure of goods (less than 1% of cases in 2014 – 2015 resulted in the removal of goods). Therefore it appears that by going through the initial stages, debtors are prompted to make payment.