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HMRC internal manual

Inheritance Tax Manual

Settling the penalty: letter of acceptance

If the offer is satisfactory in every respect (IHTM36263) and does not need to be submitted to your SO manager or Tax Administration, Litigation and Advice (TALA) (IHTM36361), you should issue a letter of acceptance in thefollowing terms

‘On behalf of the Commissioners of HMRC I accept your (client’s) offer dated …….. to pay the sum of £….. on the basis set out in the offer.

The amount of £….. should be remitted to (here enter the Cashiers address for your location) quoting the name of the deceased (or Settlement etc as relevant), the reference number and Section 247/248 Penalty.’

The acceptance letter must short and as unequivocal as the offer. You must not

  • modify the terms of the offer
  • set out any of the terms of the offer.

If there is anything more to be said, not directly connected with the acceptance of the offer, a separate letter should be sent. A separate side letter (IHTM36166)must also be sent when accepting an offer of a penalty from the personal representatives of the person liable for the penalty.

You should also note the following

  • the heading of the letter should include the name of each person who has signed the offer
  • if there is no agent, the acceptance letter should be addressed to all the persons making the offer and, if necessary, a copy should be sent to each individually
  • if the letter of offer has been amended by the agent (IHTM36263) the opening words should be ‘With reference to your (client’s/clients’) letter of ………(and your letter of …….) in which ….’
  • the gross amount of the offer should be entered in the first paragraph, and the net amount to be paid after all deductions in the second
  • the final sentence should be omitted if the settlement is covered by payments on account or set-offs, and no further payment is required
  • if an offer you are authorised to accept is accompanied by a remittance for the balance due, the remittance should be acknowledged
  • if a specific date is given for payment of the balance due (or for the first instalment of an instalment offer), the letter of acceptance must be issued in time to reach the taxpayer before the payment is due: otherwise the contract would be impossible to perform
  • when accepting an instalment offer, you should insert ‘and in the manner’ after ‘on the basis’, and the final sentence should begin ‘The first instalment of £…..’

If the settlement proposed in a case referred to Tax Administration, Litigation and Advice (TALA) is approved, they may issue the letter of acceptance and will leave a copy on your file.