August 2005
31.2.29 General policy on disposal of motor vehicles
Where a motor vehicle is not subject to any finance agreement and the official receiver considers that it is not an exempt asset, steps should be taken to dispose of the vehicle as soon as possible. The vehicle should be disposed of even if it appears that there may be an insolvency practitioner appointed to deal with the estate later as a vehicle is a potential source of liability and must be dealt with accordingly.
The use of agents in the sale of a motor vehicle is not mandatory. A private sale by the official receiver may result in a better realisation for the insolvent's estate. If the official receiver is unable to reach an agreement with the bankrupt /director for the sale of the vehicle or if the bankrupt/director is unable to meet all the criteria for the purchase of the vehicle (see paragraph 31.2.34) the official receiver should employ agents to sell the vehicle.
In bankruptcy, where a bankrupt has expressed a wish to keep the vehicle, wherever possible the disposal of the vehicle should be effected so that the bankrupt retains use of the vehicle (see paragraph 31.2.34) . In company liquidations there is no necessity to make special efforts designed to give a director continuing use of the vehicle.
Disposal of a vehicle to a director/bankrupt should be dealt with by the local official receiver's office at an early stage and should not be left to the RTLU.
31.2.30 The official receiver acting as receiver and manager
If the official receiver decides that a vehicle is not exempt property, he/she may arrange for the immediate disposal of the vehicle, notwithstanding that he/she is not the trustee, if it would be beneficial to the estate, for example by avoiding incurring storage costs which would diminish the benefit for the estate [note 1]. Such arrangements should still be made if it is considered that an insolvency practitioner is likely to be appointed as trustee of a bankrupt’s estate, since a vehicle may be the source of potential liability. If it is known that an insolvency practitioner is likely to be appointed as trustee the usual care should be taken to ensure that the official receiver does not do anything that may lead to future criticism from the trustee (e.g. that the trustee would have been able to realise significantly more for the vehicle than the amount realised by the official receiver).
31.2.31 Disclaimer only in exceptional circumstances (October 2008)
For the reasons given in paragraph 34.24, it should not normally be necessary to issue a disclaimer in respect of a motor vehicle. Instead, real action, as outlined elsewhere in this chapter, should be taken.
Where, in exceptional circumstances, it is necessary to issue a disclaimer in respect of a motor vehicle, the express authority of Technical section should first be sought – setting out the reason(s) why it is not possible to take positive action to deal with the vehicle.
Any insurance cover arranged by the official receiver (see paragraph 31.2.6) should be cancelled immediately agents have disposed of the vehicle. Where the insolvent has a current insurance policy the official receiver should check that there is not an outstanding or anticipated claim prior to terminating the cover. When it is terminated by the official receiver, any unexpired premium paid should be recovered from the insurance company for the benefit of the estate.
31.2.33 Value of the vehicle (amended August 2008)
The official receiver should refer to Parker’s Guide to ascertain the value of the vehicle. Alternatively, some offices may have arrangements with their local agents to provide this information at no cost to the estate. Also see paragraph 31.2.5C on valuing a cherished/personalised registration mark.
The value of the vehicle should be ascertained in order to determine if there will be any benefit for the estate after taking into consideration the cost of insurance and sale. The value will also be required in order to effect insurance cover.
31.2.34 Sale of motor vehicle by the official receiver (amended August 2008)
The official receiver may find that it is beneficial to the estate to arrange a private sale to a director of a company in liquidation or the bankrupt. The director or bankrupt should be asked whether he/she is interested in retaining the vehicle. If there is a cherished/personalised registration mark on the vehicle, the director or bankrupt should be asked if he/she also wishes to retain that at the same time. If so it should be put to the director/ bankrupt that this may be possible provided that he or she;
The private sale of a vehicle is only possible where the director/bankrupt is cooperating in full in the proceedings. It is important that the administration of the case is not delayed by the sale and that the official receiver does not have to spend an unreasonable amount of time dealing with the matter. It should be emphasised to the director or bankrupt that the provision of funds and documents needs to be dealt with as a matter of urgency and any undue delay will result in the official receiver instructing agents to remove and sell the vehicle (see paragraph 31.2.38).
The agreed price for the vehicle must be provided by way of cash, a banker's draft or building society cheque. Personal cheques are not acceptable.
31.2.34A Sale of a cherished/personalised registration mark back to the bankrupt or director (inserted August 2008)
Where the director or bankrupt wishes to retain a personalised registration mark only (and not the vehicle it is attached to), agents should be instructed to value the registration mark, and proceed with the transfer back to the director/bankrupt prior to the vehicle being sold. In bankruptcy, the sale can only be made if the funds come from a third party. The vehicle will need to be issued with a new registration mark by DVLA before it can be sold through the agent’s normal procedure. See paragraph 31.2.38 for more information on instructing agents to sell a vehicle.
31.2.35 Agreeing a price – bankruptcy (amended August 2008)
As with all assets the official receiver has the discretion to negotiate a sale price for a motor vehicle and/or registration mark and any reasonable offer should be considered. Whilst this means that the 'list' price for the vehicle may not always be achieved, it does not mean that an unreasonably low offer has to be accepted as the official receiver can always decide to instruct agents to dispose of the car if a satisfactory price cannot be agreed (see paragraph 31.2.38).
The outstanding value of any road fund licence in respect of the vehicle should be taken into account as this could be surrendered for a refund if the vehicle was sold through agents.
If the vehicle has no apparent resale value e.g. because of its age a nominal sale price of £10 plus the value of the outstanding road fund licence can be agreed.
31.2.36 Agreeing a price – companies (amended August 2008)
If a full value for money offer for a company vehicle and/or registration mark is made by a company director, acceptance of the offer may provide more for the estate than the use of agents for its disposal and a private sale of the vehicle by the official receiver as liquidator should be considered. As with bankruptcy all relevant documentation should be provided to the official receiver, including a certificate of road worthiness (see paragraph 31.2.39) and the outstanding value of the road fund licence should be taken into consideration in agreeing a sale price.
31.2.37 Change of registered keeper
If the sale of the motor vehicle results in a change of the registered keeper it is the sellers responsibility to inform the DVLA of the change. On the sale of a vehicle by the official receiver where a change in the name of the registered keeper is necessary the official should detach the green slip V5/2 from the vehicle registration document and hand it to the buyer. The remainder of the form should be completed by the official receiver to show the change of keeper and sent to the DVLA.
31.2.38 Instructing agents (amended August 2008)
In cases where the official receiver is unable to reach an agreement with the director/bankrupt for the sale of the vehicle and or cherished/personalised registration mark or where the director/bankrupt is unable to meet all the criteria for the purchase of the vehicle, the official receiver should employ agents to dispose of the motor vehicle and/or registration mark. Disposal should preferably be to a reputable dealer in motor vehicles. The use of agents removes the possibility of any accusations concerning the impartiality of the official receiver and also ensures that the official receiver is not involved in checking the roadworthiness of vehicles (see Chapter 32 Agents generally).
The official receiver must not knowingly sell or supply an unroadworthy vehicle (see paragraph 31.2.39).
31.2.38A Use of agents to sell a cherished/personalised registration mark (inserted August 2008)
Where the registration mark is not being sold with the vehicle or back to the director or bankrupt, the official receiver may either:
The sale should be via the official receiver’s agents, who may use the services of an independent specialist. If an independent specialist is used, they usually offer two types of service;
The official receiver should consider the benefits of both these and any other routes offered by their agents.
31.2.38B Process for selling or retaining a cherished/personalised registration mark (inserted August 2008)
If a registration mark is to be sold to a third party, form V317, available on the Direct Gov (http://www.direct.gov.uk/en/Motoring/BuyingAndSellingAVehicle/PersonalisedRegAndNumberPlates/DG_4022576) website, should be completed to apply for the transfer. The official receiver’s agents will normally complete this form. The agents will also need a copy of the winding-up order or bankruptcy order as only the registered keeper can normally apply for a transfer. In addition the agents will need to provide the registration documentation, MOT test certificate, and a fee of £80 to DVLA for the transfer. The vehicle must be currently taxed to be eligible.
If a registration mark is to be retained by the official receiver pending a sale, form V778/1, available on the same website, should be completed by the official receiver’s agents to apply for the mark to be held. This will remove the registration mark from the vehicle and hold it on a certificate for a period of 12 months. The agents will need a copy of the winding-up order or bankruptcy order as only the registered keeper can normally apply for a transfer. In addition the agents will need to provide the registration documentation, MOT test certificate, and a fee of £105 to the DVLA on application. The vehicle must also be currently taxed to be eligible for the scheme, although there are some exceptions to this.
Further details regarding both these schemes can be found on the Directgov website.
31.2.39 Roadworthiness of vehicles
It is a criminal offence for a person to sell or supply, or to cause or permit the sale or supply, of a motor vehicle which is in an unroadworthy condition [note 4]. The official receiver must be able to satisfy a court that he/she had "reasonable cause to believe" that the vehicle was either roadworthy or would not be used on the road until it was put in a condition in which it might be used lawfully [note 5]. In practice, case law indicates that a court would require the official receiver actually to believe that the vehicle was roadworthy or would not be used in an unroadworthy condition (see 31.2.41).
It is therefore essential that before any sale of a motor vehicle is finalised by the official receiver that the certificate of roadworthiness is signed by the purchaser [Note 3].
31.2.40 Sale of a roadworthy vehicle
Where the criteria in 31.2.34 have been met and the sale price agreed between the purchaser and the official receiver the motor vehicle may be sold by the official receiver. A certificate of purchase [Note 6] from the purchaser must be completed and retained on the official receiver's file.
31.2.41 Sale of an unroadworthy vehicle
Where a person sells or exposes for sale an un roadworthy vehicle in the course of a trade or business the person selling in the course of trade or business must prove that he/she took all reasonable steps to ensure that an offeree or potential purchaser was aware that use of the vehicle would be unlawful in its present condition [note 7]. Where a vehicle is known to be unroadworthy, it may be sufficient protection for the official receiver when selling the vehicle, if he/she obtains written evidence from the purchaser of his/her intention to have all necessary repairs carried out (e.g. written confirmation from a garage that the vehicle has been booked in for repair). Any known faults and the necessity of dealing with them must be pointed out in writing to a potential purchaser. It will not be sufficient protection for a scrap metal certificate to be obtained from a private treaty purchaser when it is clear the likely intention of the purchaser is to use the car on the road. The official receiver cannot simply turn a blind eye to the realities of the situation without risking subsequent problems. It is an offence for a person to use, or cause or permit another to use, a motor vehicle on a road when the condition of the motor vehicle is such that its use involves a danger of injury to any person. The case law on the meaning of "permitting" explains that it will involve knowledge of the facts and that shutting ones eyes to the obvious is sufficient for the offence [note 8].
Where an unroadworthy vehicle is sold the official receiver should obtain from the purchaser a declaration that he/she acknowledges that the vehicle is unroadworthy [Note 3]. A copy of this declaration and written evidence from the purchaser of his/her intention to have all necessary repairs carried out (e.g. written confirmation from a garage that the vehicle has been booked in for repair) must be retained on the official receiver's file.
31.2.42 Vehicles of little value
July 2007
The End-of-Life Vehicles Regulations 2003
Even if a vehicle has little or no value it must not be abandoned, vehicles must always be dealt with. Official receivers must conform to the above legislation in disposing of vehicles that vest in an insolvency estate and have little or no value, or are un-roadworthy which includes those which are unroadworthy by virtue of having no tax, MoT or insurance. Many official receivers have local arrangements with agents who deal with such vehicles, often incurring a cost to the estate.
With the current high price of scrap metal and the network of recycling plants it is possible to deal with most of these types of vehicles at no cost to the estate, while conforming to the above Regulations, and to the requirements of the Road Traffic Act 1988.
The End-of-Life Vehicles Regulations 2003 became fully effective on 1 January 2006 with the purpose of the UK conforming to section 2(2) of the European Communities Act 1972 [2] in respect of measures relating to the prevention, reduction and elimination of pollution caused by waste and in respect of matters relating to the prevention of waste from vehicles and forms of recovery of end-of-life vehicles and their components.
The Regulations require that at that end –of-life vehicles may only be treated at Authorised Treatment Facilities (ATFs). For those vehicles covered by the Regulations the ATF will issue a Certificate of Destruction (CoD) and will de-register the vehicle with the DVLA.
Vehicles that must be dealt with under the Regulations are:
In order to enable ‘last owners’ to conform to the above regulations the vehicle manufacturers and the recycling industry have set up a network of (independent) treatment facilities which are required to take and de-pollute vehicles and to issue a CoD free of charge for complete vehicles delivered to their facility. With the current high scrap metal values most of the ATF providers are now willing to provide a free collection service for these vehicles within a defined radius (typically 15 to 30 miles of the collection address), however some ATF providers have offered county wide free collection. The network of ATF providers is such that on average a collection site is always within 30 miles of an ATF.
It should be noted that ATFs are only required to deal with complete vehicles and in addition to The End-of-Life Vehicle Regulations provisions and requirements official receivers should also be aware that vehicles that fall within the category to be dealt with may be classified as hazardous waste within the meaning of The Hazardous Waste (England and Wales) Regulations 2005 (particularly when a vehicle is partly dismantled or otherwise incomplete). This legislation requires that all persons that transport hazardous waste to an ATF site for disposal are required to hold the appropriate waste transport license, Technical Manual 32.1.8 (Dealing with waste) refers. ATFs who carry out such collections are holders of this license and therefore conform to this legislation.
There are two umbrella organisations that provide the link between the individual ATF providers and the vehicle manufacturers and these two organisations hold contracts with all the vehicle manufacturers, covering all makes of vehicle between them. Additionally some ATFs also hold their own contracts with specific vehicle manufacturers.
Details of the two organisations who can provide details of ATF sites local to the official receivers offices (or the collection address of a vehicle to be dealt with if this is closer) are:
Cartakeback.com – address FREEPOST CARTAKEBACK .COM
Autogreen – address London Road, Daventry, Northants NN11 4ND
Both the above have web sites that provide a search locator facility to enable the closest ATF to be located by entering a postcode. The web addresses are:
July 2007
Technical Section has contacted a random sample of ATF providers and a large proportion have responded stating they are able to offer a free collection service. In addition Cartakeback have stated that if an official receiver contacts them directly they will provide free collection anywhere in England and Wales from their central location.
The requirements for arranging collection by an ATF are that the official receiver requests collection in writing by email, fax or letter, to the ATF closest to the vehicle location (or directly through Cartakeback) stating the location address, vehicle details, and where possible, providing the vehicle documents/information regarding the whereabouts of the vehicle documents. By using the above links to autogreen or cartakeback, and typing in the postcode of the location of the vehicle to be scrapped, the contact details of the closest ATF are available. The official receiver should then contact the ATF and confirm their requirements for dealing with the vehicle and the costs (if any).
The instructions issued by the official receiver should include a statement that he/she is the legal owner of the vehicle by virtue of the bankruptcy order, and a copy of that order may be enclosed if requested. The official receiver must request that the CoD is sent to the office for inclusion on the file as evidence of destruction. The ATF is able to deal with vehicles having no documentation but will require a declaration of ownership and must be able to identify the vehicle from its registration mark or VIN number. This enables the ATF to notify DVLA electronically of the destruction of the vehicle and to issue a CoD to the official receiver.
It is a requirement of a scrap dealer becoming part of the ATF network that public liability insurance is held but official receivers should assure themselves that such a policy is in force before instructing an ATF provider.
31.2.44 Local authority removal of vehicle
July 2007
In view of the change of guidance at 31.2.43 it should no longer be necessary to instruct a local authority to remove a vehicle.
31.2.45 Refund of road fund licence
Where a vehicle is to be scrapped or collected by a local authority, the vehicle road fund licence (tax disc) should, if it is worthwhile to do so, be surrendered (once the vehicle has been scrapped or collected) to the local Vehicle Licensing Office. Alternatively it can be posted to the Vehicle Customer Services, DVLA, Swansea, SA99 1AJ. DVLA form V14 should be used. A refund will be made on the basis of complete unexpired months.
31.2.46 Standard operator's licences
Where the insolvent used a vehicle the weight of which exceeds 3.5 tonnes gross weight, they will have been required to obtain a standard operator’s licence. This relates to any business which carried goods for hire and reward and those who use lorries to carry their own goods. Similar provisions apply to operators of passenger service vehicles.
Licences are normally operative for five years and give details of each vehicle and trailer covered by it. Discs for display in each vehicle are also issued. Both the licence and the discs should be recovered by the official receiver. The licence may reveal undisclosed vehicles or indicate that vehicles formerly owned may have been disposed of, putting the official receiver on inquiry as to their proceeds of sale. Traffic Commissioners based at eight Traffic Area Offices (TAO) supported by the Vehicle and Operator Services Agency (VOSA) grant licences. The official receiver should inform the TAO that issued the licence of any winding-up or bankruptcy order. If the licence and discs are returned to the local traffic area office (part of the Department of Transport) which issued them, a refund of licence fee for unexpired complete years will be obtained. Addresses of TAO can be obtained from the Department of Transport website at www.dft.gov.uk. The licences themselves cannot otherwise be realised; it is not possible to transfer them to another person. Where a disc is not recovered, the local traffic area office will usually accept written confirmation from the official receiver of its loss and issue the refund.
[Back to Part 3 - Vehicles which are Exempt Property (bankruptcy only) (revised April 2006)]