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HMRC internal manual

Compliance Handbook

Charging penalties: contract settlement: cases that need to be settled by contract

Settlement by contract should continue to be used in cases where it is not practicable to assess the tax. The types of case that will still need to be settled by contract include

  • most EC and CIS cases because the formal process is normally more time-consuming
  • voluntary payments, for example EC employee benefits
  • complex cases of multi-entity non-compliance and contrived liquidations leading to a range of possible liabilities under IT, CT, PAYE, S419/S455
  • joint and several liability
  • companies that have been struck off
  • voluntary restitution cases.