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HMRC internal manual

Enquiry Manual

HM Revenue & Customs
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Contract settlements: no settlement meeting

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

Normally you need to hold a settlement meeting with the taxpayer, see EM6380+.

You cannot insist on a settlement meeting but the taxpayer should know exactly where they stand before making any offer.

A settlement meeting may not always be necessary in straightforward cases where the offer we are seeking can be clearly explained over the telephone or in writing.

A meeting will not normally be necessary when all of the following conditions apply:

  • there are difficulties arranging a meeting because of the geographical location of the taxpayer or their agent(This content has been withheld because of exemptions in the Freedom of Information Act 2000)  
  • the taxpayer has been given the appropriate penalty factsheets and you have fully explained your view of the taxpayer’s culpability and they understand this explanation
  • you have fully explained how you arrived at the tax, interest and penalties
  • the taxpayer knows what offer you consider appropriate and is prepared to make that offer on the understanding that HMRC will decide whether or not to accept an offer
  • you are satisfied that the taxpayer has sufficient means to meet the terms of the offer being sought, and 
  • you have discussed future conduct, see EM6390.

In larger and more difficult cases it will not normally be possible to clearly explain the offer we are seeking over the telephone or in writing.

If it is a case in which you would normally hold a meeting, but exceptionally it is not possible to arrange a meeting, you must make the taxpayer directly and fully aware of your reasons for the penalty and how you arrived at the tax, interest and penalties in the offer being sought. You must send a copy of your letter to the agent.

Experience suggests that it is in cases without a settlement meeting that substandard offers are most frequently made. If you have accepted the taxpayer’s request for no meeting and you receive an offer which is less than the agreed sum you should ask for an explanation of the shortfall. Unless an acceptable explanation is given or the amount is trivial, you should renew your request for a meeting with the taxpayer present. If the taxpayer will neither attend nor make a standard offer you must proceed on formal lines, see EM3950+.