CCM8480 - Closing the Examination: Inviting the Offer - The Contract

HMRC’s preferred method of settlement in a case involving penalties is by way of a legally binding and enforceable contract between the claimant and the Commissioners for HMRC. A contract comes into existence when a letter of offer, signed by or on behalf of the claimant, is accepted by or on behalf of the Commissioners for HMRC.

In English law a contract normally requires consideration to make it binding. In this case the consideration is the claimant’s offer to pay which is matched by the Revenue’s agreement not to take any further proceedings. Scottish contract law does not have this requirement but it is still considered desirable to set out the consideration in an offer from someone living in Scotland.

The wording of the letter of offer and the letter of acceptance must be such that they represent a legally binding contract and provide a basis for legal action in the event of default. It is therefore very important that both letters are correct in every way.

CCM8490 tells you about the wording of the offer.