IHTM38341 - Contract settlements: when is a contract settlement appropriate?

A contract settlement should not normally be necessary if the payment of tax and/or interest is to be deferred for 6 months or less.

We should always aim to obtain full cash payment because:

• we get the money sooner
• at less cost
• with little or no risk of default

If full cash settlement is offered within 6 months the matter can generally be dealt with informally with post dated cheques or an undertaking to provide payment by agreed dates.