Introduction: Classes of Settlements for Enquiry Cases
We divide settlements into classes for accounting and recording purposes. These are as follows:
Class 1 Cases are for Income Tax chargeable on an individual, if the total culpable duty included in the settlement does not exceed £4,000, in respect of
- untaxed interest assessable under ITTOIA05/S369
- charges on income (including deeds of covenant and excess MIRAS relief)
- bank, local authority and building society interest received
- all other forms of taxed investment income from UK sources (for example, UK dividends).
Class 1A Cases are all those that don’t fall within Class 1 or Class 6.
Classes 2, 3, 4 & 5 have been withdrawn.
Class 6 Cases are all employer compliance cases. More information is in the Employer Compliance section of the Compliance Operational Guidance (COG) at COG900200 onwards.
- ‘Settlement’ includes enquiry cases concluded by contract or by formal means where there is a penalty position even if it is proposed not to seek a penalty.
- The limits at EM6402a and EM6402b should be applied to each separate settlement where there are linked enquiries e.g. company and directors. Each partner in an SA partnership enquiry will have a separate settlement. But a pre-SA partnership settlement comprises a single settlement.
- CTA10/S455 duties are counted in the settlement even if they are wholly covered by relief under CTA10/S458 at the point of settlement EM8642.
- Tax on which penalties are imposed automatically, for example under paragraph 18 of Schedule 18 FA 1998, should be excluded.