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HMRC internal manual

Compliance Operational Guidance

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

Once the expected offer has been

  • authorised see COG914155 and COG915030
  • the settlement discussion held see COG914165, and
  • the employer/contractor invited to make an offer for consideration by HMRC see COG914505 onwards.

Once received it must be accepted by HMRC in order to form a legally binding contract.

A correctly worded letter of acceptance is equally as important as a correctly worded letter of offer. See EM6301.

On receipt of a letter of offer

In cases of doubt or difficulty, contact TAA for advice (see COG904770).

If the letter of offer is satisfactory, submit the case to the appropriate officer who will consider whether or not we can accept the offer.

Under no circumstances is self authorisation allowed.

Note: The Authorising Officer may differ between business areas and teams, and sometimes between different cases within a team. In normal circumstance this will be one level above the caseworker and could also be

  • a line manager or manager with the appropriate skills
  • another manager or tax specialist within a team
  • a tax specialist from another team, or
  • a Customer Relationship Manager (CRM). The CRM may be the same grade or a lower grade than the tax specialist / caseworker.

The following offers must be authorised by a Local Compliance Authorising Officer (LCAO).

  • The total culpable liabilities amount to £100,000 or more.
  • The ‘voluntary’ grossed up settlement amounts to £100,000 or more.
  • The combined totals of (i) and (ii) amount to £100,000 or more.
  • A penalty only offer where the underlying duties satisfy the above 3 scenarios.
  • An instalment arrangement will exceed three years.
  • The offer differs from the expected amount to the extent that it cannot be accepted locally, COG914170, EM6211.

The papers must be submitted without delay to the LCAO.

Note: Different criteria for referral to the LCAO may apply in LBS and Specialist Teams. Referrals should be made in accordance with Business Stream practice.

The submission to the LCAO must

  • include a report of the facts of the case on the AO report (available on SEES ‘forms and letters’) and the Contract Settlement Form (CSF) (available on SEES - NPPS penalties toolkit)
  • the report must be countersigned by the caseworker’s line manager.

If the LCAO accepts the offer they will

  • authorise the offer by signing the CSF, and
  • return the papers for you to prepare the acceptance letter.

In all cases when the papers are returned with the settlement authorised, you should

  • complete the Class 6 Contract Settlement Stencil
  • follow the SAFE accounting procedures COG915105
  • obtain the SAFE charge reference for inclusion in the letter of acceptance
  • arrange for the issue of the acceptance letter. The letters of acceptance are available on SEES with the following product codes -
    • LOA1 Letter of Acceptance - single payment
    • LOA2 Letter of Acceptance - instalment

Note: The acceptance does not need to be signed by the person who formally authorised it. See EM6402.

The acceptance must be unequivocal. The terms of the offer must not be modified in the letter of acceptance and any attempt to do so could make the acceptance ineffective. If there is any more to be said a separate letter should be sent.