Contract Settlements: Letters of Offer: ‘Without Prejudice’
The guidance about contract settlements at EM6000+ only relates to direct tax. You must never include VAT or VAT penalties in a contract settlement.
A taxpayer who marks an offer ‘without prejudice’ does so to prevent the offer from being used subsequently.
If you do not accept the offer you cannot use it as evidence that, for example, certain figures have been agreed. You should attach to the offer a note referring to this instruction to ensure that it is not inadvertently used improperly.
If you accept the offer, the marking is no bar to its acceptance.