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HMRC internal manual

Compliance Operational Guidance

HM Revenue & Customs
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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.

You must therefore

  • add the total payments on account and set-offs to the amount of the first instalment or
  • create an additional instalment equal to the payments on account and set-offs. The due date for the additional instalment must be the same as the first proper instalment.

For example, the employer offers to pay the sum of £50,000, to be accounted for as follows:

  • £5,500 to be satisfied by a repayment of tax……….
  • £4,500 already paid on account
  • £10,000 to be paid within 30 days of the date of the letter notifying………………….
  • £30,000 to be paid by 10 instalments of £3,000 each, on or before the last day of each………

Note: The letter of acceptance must not be issued until the SAFE charge has been raised.

Using the above example, and on the basis that the letter of acceptance was issued on 12/2/09, you would instruct the SAFE nominee to raise a charge for the offer of £50,000 as follows:

  • a first instalment of £20,000 due on 11/3/09 or
  • a first instalment of £10,000 and a second instalment of £10,000 both due on 11/3/09

followed by

  • 10 instalments of £3,000 the first such instalment due on or before 30/4/09.

Note: An additional 3 days must be added for the first instalment on the SAFE stencil.

The amount and due date for each instalment must be listed on the SAFE stencil.

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 11/4/09, 11/5/09 etc. instead of 30/4/09 and 30/5/09 etc.

To avoid manually amending the due date of all subsequent payments it is suggested that the SAFE nominee enters the date of the first instalment to the month end date (in the above example 30/3/09) 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 instalment to the correct due date, in the above example - 11/3/09.

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).