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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: time to pay

It must be remembered that you are dealing with old duties that should have been paid some time ago. It is only reasonable that HMRC should be paid without further delay.

A lump sum offer is therefore standard. However there will be cases where the employer has a means problem and is unable to pay in one early lump sum. Means is not the same as ‘ready cash’. If the employer has assets HMRC expects that they will be realised or used as security to borrow against. See EM6214 onwards.

If there is a genuine means problem there should be no difficulty in obtaining information from the employer to demonstrate the facts.

The information should include

  • a copy of the latest financial accounts including internal management accounts
  • any other draft accounts
  • any business plans
  • any cash flow projections
  • anything similar prepared internally or perhaps for the bank
  • projected income and expenditure.

Where the employer is a sole proprietor or a director of a close company (see below), you should

  • consider arranging for completion of a form MS142(IT) (EM3540).

In the case of a close company the means of the shareholder directors as well as the means of the company may well need to be considered (COG914565).

Once you have reviewed all relevant information and you consider that there is a genuine means problem, you should

  • consider an instalment arrangement as outlined at COG914555.

Where an instalment arrangement is granted you should also include an amount for the time to pay granted (forward interest COG914580).