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HMRC internal manual

Enquiry Manual

Contract Settlements: Letters of Offer: Correction of Errors

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

Where, in the case of an offer which can be accepted locally, the amount of the offer is acceptable but the letter is not, you should try to rectify the error or omission in the simplest way possible.

You might

  • obtain a fresh offer, or
  • return the original for amendment and/or initialling.

Do not accept the use of correcting fluid, especially for any really material parts of the offer.

Where the error or omission is a minor one you can

  • tell the taxpayer or agent that the offer is acceptable in principle, but for the defect, and that a formal letter of acceptance will be issued if he will pay the balance due, or
  • issue a letter of acceptance where the offer is accompanied by payment in full so no collection problems can arise.

If the defect cannot be remedied in the way suggested above, and the taxpayer is not readily accessible, an amending letter from the agent referring to the defect in the original letter should be requested on the following lines.

‘We are authorised by our above-named client to refer to his/her letter of offer dated ………… and to confirm that payment of the net sum of £ ……… due under the offer will be paid within 30 days of the date of the letter notifying your acceptance of the offer.’

If this is done, the letter of acceptance EM6410 should be amended to read

`I refer to your client’s letter ………. and your letter dated ………. . On behalf of the Commissioners for Her Majesty’s Revenue and Customs …..’.

If a letter of offer which cannot be accepted locally EM6402a and EM6402b contains errors, and you have any doubts about the offer for any other reason, you should

  • consider whether to submit the case with the defective offer so that

    • it can be approved in principle, and
    • any other flaw can be dealt with at the same time
  • only accept payment of the balance due if

    • the taxpayer or his agent confirms in writing that the payment is tendered on account, and
    • it is clearly understood that its acceptance does not commit HMRC in any way EM1937.