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HMRC internal manual

Compliance Operational Guidance

HM Revenue & Customs
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Supporting Guidance: employer compliance: guidance by subject: letter of offer: purpose

The purpose of inviting an offer in settlement cases is to create a legally binding and enforceable contract, under contract law. A contract is made when an offer signed by or on behalf of the employer or contractor is accepted on behalf of the Commissioners for Her Majesty’s Revenue and Customs.

Contract settlements are a shortcut to the statutory route and can save both the employer/contractor and HMRC a great deal of time in the process. However, contract settlements are not a mechanism to reduce (or negotiate) the amount payable. A contract settlement should include amounts that are due under statute. See also COG914515.

Letters of offer must be seen to be made voluntarily.

But it is unrealistic to expect employers or contractors to make offers which satisfy all the necessary requirements to form a legally binding contract without some guidance on the wording.

For this purpose specimen letters of offer are provided at COG914585 onwards.