EM6339 - Contract Settlements: Letters of Offer: Detail - Interest, Penalties and Surcharge

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

If there is no penalties or surcharges included in the settlement, then neither should be included in the letter of offer and any reference to them in the template letters of offer in EMAPP1, should be deleted.

Similarly, if there is no interest to be included in the settlement there should be no reference to interest in the offer.

Please bear in mind that if only tax (and NIC) and interest are to be collected the liabilities should normally be recovered by assessment.

A mention of penalties where a claim could be made (for example, a case in which the level of penalties has been abated or reduced to nil) would not invalidate the offer, but it is preferable to omit the mention.

You must consider whether an Accelerated Payment Notice (APN) or Partner Payment Notice (PPN) has been issued which has resulted in, or may result in, a late payment penalty or surcharge for failing to pay on time. (This content has been withheld because of exemptions in the Freedom of Information Act 2000)