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HMRC internal manual

Compliance Operational Guidance

Supporting Guidance: employer compliance: guidance by subject: letter of offer: acceptance

Once the expected offer has been

you must invite the employer or contractor to make an offer for consideration by HMRC, see COG914505 onwards.

Once received, the offer 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 check it thoroughly, see COG914535.

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

If the letter of offer is satisfactory, submit the case to the appropriate authorising officer (AO) for them to consider whether or not the offer is acceptable.

Under no circumstances is self authorisation allowed.


Note: The Authorising Officer (AO) 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 Compliance Manager (CCM). The CCM may be the same grade or a lower grade than the tax specialist or caseworker.

Referrals for authorisation should be made in accordance with your business team practice, see EM6402.

Generally speaking the following offers must be authorised by the AO:

  • 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, see COG914170 and EM6211.

The papers must be submitted without delay to the AO.

 Your submission to the AO 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)
  • be countersigned by your line manager.

If the AO 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.