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HMRC internal manual

Enquiry Manual

Contract Settlements: Letters of Offer: Checklist

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

  • pay particular attention to the points below when checking the draft of the letter of offer, and
  • refer to EM6252 where instalments are necessary. 

Point A

  • Does the letter make sense?
  • Does it set out in clear and unambiguous words the terms which have been agreed, or which you expect to be agreed at the settlement interview?

See EM6335.

Point B

  • Does it set out the consideration for the payment to be made by the taxpayer?

See EM6336.

Point C

  • Does it set out all the duties (and any NIC) taken into account in framing the offer?

See EM6337.

Point D

  • Does it contain a reference to the taxpayer’s failure or default?

See EM6338.

Point E

  • Does it mention interest and/or penalties and/or surcharge?

See EM6339.

Point F

  • Does it set out the gross amount of the offer before any deductions?
  • Does it show separately, and in precise terms, any deduction?
  • Does it show any balance still to be paid?

See EM6340.

Point G

  • Does it say precisely when payment is to be made?

See EM6341.

Point H

  • Does it specifically exclude any duties or NIC which will not be included in the settlement?

See EM6342+.

Point I

  • Is it suitably worded for signature by the person(s) intended to sign it?

See EM6350.

Point J

  • Does it include the standard interest clause?

See EM6351.