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HMRC internal manual

Enquiry Manual

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.