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HMRC internal manual

Enquiry Manual

Contract Settlements: Letters 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.

Detail - Full and Final Settlement

Sometimes the taxpayer or agent may wish to include the phrase “in full and final settlement” in the letter of offer. As this does not add to the meaning of the letter of offer, it is preferable for it to be excluded. Despite this, when all parties understand they are only settling the liabilities identified during the enquiry this raises no problems and if subsequently further liabilities come to light then you will be able to make a discovery EM3250+.

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)