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HMRC internal manual

Enquiry Manual

Contract settlements: expected offer: instalments - letter of offer

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

You should

  • agree terms with the taxpayer, and
  • prepare a letter of offer based on one of the appropriate examples in EMapp1 adapted as necessary.

When drafting the letter of offer you should

  • bear in mind the points set out at EM6310 as well as these following additional points.

    • The instalments should total precisely the amount of the offer. It may be necessary to make one of the instalments a balancing figure EM6253.
    • The total instalments should agree the figures on form 94.
    • The amounts of the instalments should be precisely stated and the dates of payment should be precisely ascertainable. They should preferably be by reference to the date of the letter of acceptance.
    • An instalment should not be expressed to be due by reference to the date of payment of an earlier instalment as that payment might be delayed, though it can be expressed to be payable by reference to its due date.
    • If it is necessary to use specific dates the earliest of those dates must be far enough ahead to allow time for the offer to be accepted before the instalment becomes due. Extra time will be required if the offer cannot be accepted locally.
  • refer to the examples at EM6253+.
  • (This content has been withheld because of exemptions in the Freedom of Information Act 2000)