EM1860 - Working the enquiry: meetings: settlement meetings
When is a settlement meeting likely to be needed
A settlement meeting is most likely to be needed where there are disputes about the settlement figures, especially penalties, or where the method of settlement has to be agreed or settlement involves a non-standard letter of offer or deed. You may also need a settlement meeting if the taxpayer has requested an installment arrangement.
What is the purpose of a settlement meeting?
The main purpose of a settlement meeting is to
- agree the period covered by the settlement
- agree the amount of tax, interest and penalties that are due
- agree whether to settle by amendment/assessment or through a contract settlement or deed.
If you intend to discuss an instalment arrangement you will also need to consider the taxpayers ability to pay the instalments and agree the amount of forward interest in the settlement.
As with all meetings, you cannot insist on a settlement meeting with the taxpayer. Irrespective of whether you have a settlement meeting or not, the taxpayer should know exactly where they stand before you close the enquiry or invite the taxpayer to sign a letter of offer.
What do I need to cover at a settlement meeting?
You should being by discussing any open points that remain.
In cases where a certificate of full disclosure is required, this should have been sent to the taxpayer before the meeting.
(This content has been withheld because of exemptions in the Freedom of Information Act 2000)
After clearing any remaining open points, during a settlement meeting, you will normally
1. briefly review the history of the enquiry, mentioning in particular any matter which you have taken into account in abating/reducing any penalties
2. confirm agreement of figures of tax, NIC and interest and explain how any liabilities not included in the settlement will be collected
3. agree the level of culpability and why any penalties are due, see EM6383
4. if legacy penalties, see EM4800, are involved, remind the taxpayer of our abatement practice, as set out in factsheet CC/FS15 - Self Assessment and old penalty rules, and general information factsheet CC/FS1 (a or c)
5. if penalties under FA07/SCH24, FA08/SCH41, or apply, remind the taxpayer of the way in which the maximum can be reduced as set out in the penalty factsheets
- CC/FS7a for inaccuracies
- CC/FS7b for under-assessments
- CC/FS11 for failure to notify
- CC/FS18 (a and b), for late filing, and
- CC/FS19 for old employer and contractor penalties
6. ask whether there are any relevant factors or circumstances which you have not already mentioned - you must be prepared to listen and revise the penalty reduction accordingly
7. invite the taxpayer to make an offer or agree your final figures if it is more appropriate to settle by amendment/assessment.
8. discuss what steps are necessary to ensure good compliance in the future, including any penalty suspension condition.
Unless the taxpayer accepts your view of the level of penalties you will probably have to justify your view of the penalty position. You will need to be able to advice they taxpayer how you reached your conclusions and how this is supported by evidence. You should have normally explained this in a penalty explanation letter before you arrange a settlement meeting.