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HMRC internal manual

Specialist Investigations Operational Guidance

Settlement by agreement: means to fund the offer: instalments - general

Instalment arrangements are one way in which liquidity and means problems can be resolved.

It should always be remembered that instalment arrangements are not an option of choice for the taxpayer (SIOG9405) if there are sufficient means.

Even if the taxpayer’s funds are tied up in property or term investments our legitimate expectation is that the taxpayer should use the assets as security to borrow in order to fund a settlement without instalments. (When this is done any interest paid is not tax deductible)

Settlements for the whole amount outstanding within a maximum of six months are always preferable to those involving an instalment arrangement over a longer period.

Direct Debit is the preferred method of payment for instalment offers (see EM6256) and payment by this method should be invited at the Settlement meeting. As soon as the SAFE charge has been raised the taxpayer should be informed of the 14 character charge reference (usually within the Acceptance letter or on a payslip attached to the Acceptance letter). It is important that the SAFE charge reference is notified to Accounts Office so that payment can be allocated to the settlement charge and to avoid money being sent to an individual’s SA record or a Company’s CT record.