Contract settlements: expected offer: means - some capital and uncertain 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 a formal instalment arrangement is not possible because
- the taxpayer’s income is uncertain, or
- it seems likely to fluctuate wildly
it will normally be preferable to leave collection in the hands of Debt Management and Banking.
You should therefore
- settle the case by the formal route
- give DMB all the information you have about the taxpayer’s income, outgoings, assets and liabilities, using SEES form MS134, and
- explain the situation to the taxpayer and agent accordingly.