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HMRC internal manual

Enquiry Manual

Contract settlements: expected offer: means - no capital and little income

The guidance about contract settlements at EM6000+ only relates to direct tax. You must never include VAT or VAT penalties in a contract settlement.

Where it is clear, see EM6214 that the taxpayer has

  • no capital
  • only limited earning capacity, and
  • no other income of substance

and there is no prospect that they will be able to pay anything more, even by instalments, see EM6249+, you should

  • settle for the enquiry year’s liability only
  • close the enquiry by formal means, and
  • give Debt Management and Banking all the information you have about the taxpayer’s income, outgoings, assets and liabilities, including a copy of SEES form MS134 with your report.