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HMRC internal manual

Compliance Operational Guidance

Supporting Guidance: employer compliance: guidance by subject: letter of offer: instalment arrangements

Instalment arrangements should only be considered where there is a genuine ‘means’ problem as outlined in COG914550.

All instalment arrangements under three years must be authorised by your manager. You should

  • not give the impression that a request to pay by instalments will necessarily be viewed favourably.

Where unavoidable, the instalment arrangement should run for the shortest practicable time and the initial payment should be as large as possible. See COG914560 for information on payment by direct debit.

Whatever the length of instalment period you should

  • calculate ‘time granted’ (forward interest) as described at COG914580 
  • advise the employer that if full or substantial payment is made early it is the practice of the Commissioners for HMRC to allow a proportionate reduction of the addition made for the time granted (forward interest) and that if they intend to make such a payment that they should contact the Employer Compliance Team (COG914580).
  • draw up a letter of offer COG914505 and COG914585 

make sure the amounts of the instalments are precisely stated see





  • make sure the arithmetic of the letter of offer is correct so that the initial payment and instalments add up to the gross offer.
  • see COG914565 in company reviews.

Where the arrangement will exceed three years acceptance of the offer, once obtained, will rest with the Authorising Officer (COG914570). The papers should therefore be submitted without delay.