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 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 Her
Majesty’s Revenue and Customs.
In English law a contract normally requires consideration to
make it binding. In this case the consideration is the claimants
offer to pay which is matched by HMRC'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.
CCM14350 tells you about the wording of
the offer.
