Supporting Guidance: employer compliance: guidance by subject: penalties: how to conduct the settlement meeting?
It is important to remember that a contract settlement is just that: a legally binding contract governed by the same law as, say, buying or selling a house.
To create a valid, enforceable contract all parties must be fully aware of all the relevant facts, understand the process, and enter into it willingly.
A penalty settlement meeting should be conducted along the following lines. The manager or experienced caseworker will
- briefly recap the history of the case and the inaccuracies found
- confirm the agreed figures of liability and interest
- identify the culpable tax, NICs and so on
- state the maximum penalty
- remind the employer or contractor of the details of HMRC’s practice, as set out in factsheets CC/FS7a and CC/FS19
- indicate the level of penalty which is considered appropriate by reference to HMRC’s guidance
- ask whether there are any mitigating factors which have not already been mentioned
- be prepared to listen and consider revision of the penalty loading
invite the employer or contractor to make an offer
- where necessary suggest the ‘expected’ figure
- be firm in their opinion of the ‘expected offer’
- need convincing argument to change that view and
- remember the offer must not be dictated to the employer or contractor
- help with wording a suitable letter by providing a draft.
Where the offer cannot be accepted locally (COG914570), the manager or experienced caseworker should
- explain that any offer will be submitted to the Local Compliance Authorising Officer (LCAO) for consideration on behalf of the Board
- explain acceptance or otherwise rests with the LCAO and
avoid any indication that the LCAO
- is committed to a particular figure or
- any offer will be ‘recommended’ for acceptance.
Failure to cover all of the points could lead to an allegation of unfair treatment under the Human Rights Act 1998.