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HMRC internal manual

Compliance Operational Guidance

Supporting Guidance: employer compliance: guidance by subject: settlement: contract settlements - SAFE: instalment offers

An instalment arrangement will normally cover the net amount payable under the terms of the offer i.e. the gross offer less any set offs and payments on account.

On the Contract Settlement Form (CSF) this is the ‘Amount to be demanded’ at part 7.

For SAFE accounting purposes, all payments on account and set-offs must be included in the instalment arrangement as the net offer has to be accounted for in full.

Therefore:-

•if the first instalment is due within the next 30 days, the payments on account and set-offs should be added to the first instalment.

•if the first instalment is due after 30 days you must create an additional instalment equal to the payments on account and set-offs. The due date for the additional instalment is 3 days from date the charge stencil is submitted.

For example, a taxpayer offers to pay the sum of £50,000 made up in the following way.

•£2,000 has been paid on assessments raised

•£5,500 has been overpaid on the taxpayer’s SA Statement

•£4,500 has been paid on account and is held in SAFE

•£8,000 to be paid within 60 days of the offer being accepted

•£30,000 to be paid by 10 instalments of £3,000 each, on or before the last day of each succeeding month.

The letter of acceptance is prepared on 12 July 2007 and issued on 14 July.

Note: Acceptance letters must not be issued until the SAFE charge has been raised.

In this example you would instruct the SAFE nominee or, if you work in Local Compliance, the Centralised SAFE Team on the appropriate SAFE contact stencil, to raise a charge for the net offer of £48,000 as follows

•The additional instalment of £10,000 due on 15 July 2007. This is 3 days after the date the charge stencil is sent to the SAFE nominee or Centralised SAFE Team. 

•The first proper instalment of £8,000 due on or before 15 September, followed by

•10 instalments of £3,000, the first such instalment due on or before 30 October 2007.

The amount and due date for each instalment must be listed on the SAFE contract stencil. You must also make sure that any payments held on SA or any other Head of Duty system are transferred to the correct SAFE account prior to the charge request being sent so that they are available to cover all, or part, of the first instalment(s), see COG915105.

Payment by Direct Debit

You should follow the guidance above and complete the SAFE stencil in full where payment is to be made by direct debit.

(COG914560 - Instalment arrangements - Payment by direct debit).

Points for the SAFE nominee/centralised SAFE team to note

The SAFE system will automatically set the date of the second and subsequent instalments to the same date in the month as the first instalment. In the example above this would be 15/08/2009, 15/09/2009 etc. instead of 31/08/2009, 30/09/2009 etc.

To avoid manually amending the due date of all sunsequent payments it is suggested that the SAFE nominee enters the date of the first instalment to the month end date (in the above example 31/07/2009) so that the second and subsequent due dates will be set automatically to the correct dates.

Once these have been set the SAFE nominee must amend the due date for the first & second instalments to the correct due date, in the above example - 15/07/2009 & 15/08/2009.