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HMRC internal manual

Inheritance Tax Manual

Settling the penalty: checking the completed offer

When the letter of offer is returned to you, you should check that

  • any alterations made are acceptable by reference to the checklist (IHTM36333) used when drafting the letter of offer and have been initialled by the signatory or signatories
  • there are no blank spaces (for example, you cannot accept an offer ‘to pay within …… days’)
  • the offer has been signed by the correct people
  • there was no covering letter or anything else that could be thought to modify the terms of the offer (for example, a request for more time to pay) in any way.
  • the offer was signed within the previous 6 months (IHTM36266).

If the letter cannot be accepted then you will have to seek to rectify the error (IHTM36264).

Undated offer

An undated letter of offer does not make it unacceptable but the letter of acceptance (IHTM36267) should not refer to an assumed date of posting. Simply referring to the amount of the offer (‘your client’s recent letter in which she/he offers to pay the sum of ….’) will normally be sufficient to identify the offer which is being accepted. Alternatively, you could attach to your letter of acceptance a photocopy of the offer, referring to ‘your client’s offer to pay £…., of which a copy is attached.

‘Without prejudice’ offers

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. On the other hand, if the offer is acceptable, the marking is no bar to its acceptance.

Instalment offers

If the payment period exceeds 2 years (IHTM36254) you should refer the letter of offer, with a report to your SO manager who will consult with the Penalty Portfolio Holder and Tax Administration, Litigation and Advice (TALA) (IHTM36361) as necessary. The acceptance letter should be issued promptly, or the report to CCP(STU) made urgently (with the due date prominently shown at the head of the report) if

  • specific dates have been used in the offer, and
  • the first instalment is due shortly.