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HMRC internal manual

Enquiry Manual

HM Revenue & Customs
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Contract Settlement: Post Settlement Issues - Reopening a Settlement: Calculation Of Relief

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

To arrive at the relief allowable you must

  • calculate the reduction to the tax and NIC and any consequential reduction in interest and penalties charged on the tax or NIC
  • use the repayment stencil at EM6417 to ask the Miscellaneous Charges Unit in DMB to calculate a notional amount of repayment supplement on any tax or NIC to be repaid, if repayment supplement would have been due had the tax or NIC been paid against assessments.

EM1020 tells you how to contact the Miscellaneous Charges Unit.

If you originally accepted a sub-standard offer because of the taxpayer’s limited means

  • restrict the relief by the amount by which the original offer was sub-standard
  • if the taxpayer does not agree that their offer was reduced because of their limited means, you should get advice from Contact Link.

Save copies of all correspondence, calculations and so on in Case Document Store, or with the case partners if the case is not in Caseflow.