Templates for your draft letter of offer are provided at
CCM8740 to
CCM8810 (Appendix 1 - 8). You will need
to use the template relevant to your case and then choose the
appropriate options. These templates have been written in plain
English and you should follow the wording precisely. When you are
in a position to invite the offer you should prepare a draft offer
on plain paper. Stationery bearing any official heading (e.g.
office headed note-paper)
must not be used, and it
must not include any HMRC footnotes or logos.
If you are recovering overpaid credits your offer must
include a statement of the tax credits overpaid. You need to show
the WTC and CTC overpayments separately in the statement. Before
handing over the draft check that the wording is correct in every
way. You should allow a minimum of 30 days for payment but the
claimant is free to settle sooner. You might need to allow longer
if it will take the claimant a little time to gather together the
funds, but this needs to be realistic.
Example - Robbie has agreed a settlement of £3,300 and
has savings in a 60-day building society account. You might need to
allow 60 days in your letter of offer so that he can access his
savings. In such circumstances it would be unreasonable to insist
that he settles in 30 days time. However there is no need to allow
anything more than 60 days, he is expected to give immediate notice
to his building society.
If you are allowing a period longer than 30 days for
repayment you will need to consider any interest implications - see
CCM Chapter 10 - Penalties and Interest. If you need to invite an
instalment offer – see
CCM8510.
With letters of offer the normal practice is to leave the
amount blank so that it is the claimant’s offer. There may be
occasions when you do not know how the offer will be met until you
hold a settlement meeting, but you want to draft the offer in
advance. Unless you know otherwise you should calculate the offer
to reflect a payment in one lump sum. If an instalment arrangement
is agreed at a meeting you will need to calculate the forward
interest before inviting the offer.
You will need to explain to the claimant either at a
settlement meeting or in a letter how you have arrived at the
amount of the expected offer. You will need to tell them the amount
of any overpaid credits, the amount of any interest and the amount
of penalty you are proposing. It is also worth pointing out the
maximum amount of penalties, which are permitted under the Tax
Credits Act 2002. In all cases you
must warn the claimant that any future incorrect
application or failure to notify a change of circumstances is
likely to result in a much higher penalty.
Whether you invite the letter of offer at a meeting or by
correspondence will depend on the circumstances of the case –
see
CCM8295.
