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HMRC internal manual

Enquiry Manual

Contract settlements: expected offer: means - some 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.

If it is clear, see EM6214 that the taxpayer has

  • a certain amount of capital but
  • insufficient income to make a standard instalment offer, see EM6249+,

you should

  • establish what is the best cash or instalment offer the taxpayer can afford, and
  • tailor the offer to fit this by limiting the years covered by the enquiry.

If the taxpayer is prepared to make such an offer, it can be accepted locally unless the limits at EM6402a and EM6402b apply.

If they are not prepared to make an acceptable offer, you should without any prolonged delay

  • settle the case by the formal route
  • give Debt Management and Banking all the information you have about the taxpayers income, outgoings, assets and liabilities, using SEES form MS134, and
  • explain the situation to the tax payer and agent accordingly.