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COM71121 - Enquiries: CTSA enquiries: closing an enquiry: closing an enquiry: contract settlements (Action Guide)

To close an enquiry in a contract settlement case involving any CTSA AP, consider steps 1 - 24 below. The guide is presented as follows

Warning	Step 1 - 4
Reviewing the company’s accounting record	Step 5
Existing assessments and penalty determinations	Step 6
Payments	Steps 7 - 9
Informal Discharge	Steps 10 - 11
Interest	Steps 12 - 13
Late filing penalties	Steps 14 - 16
Making set-offs against the settlement charge	Steps 17 - 20
Function MAPS	Steps 21 - 23
Interaction with CQI or Caseflow	Step 24

Warning

1.	The Enquiry Manual, at EM6000-6001, tells you to be particularly careful not to issue anything which could be construed as a Closure Notice (Word 28KB) when you intend to conclude an enquiry by contract settlement. With that in mind
	Do not use Function RAMA (Record / Amend Assessment), ‘Prepare a Closure Notice with Rev Amdt’ option, to issue a Closure Notice
2.	If the company or agent insist on the issue of a formal Closure Notice before negotiating a contract settlement see the Enquiry Manual at EM6001. See EM1990 if the Tribunal (Word 34KB) has directed that a closure notice be issued
3.	Use Function RAMA, ‘Prepare a Closure Notice with Rev Amdt’ option, to issue the Closure Notice with Revenue Amendment
	Note: When you do that, COTAX automatically enters the Enquiry End Date, equal to the date of issue of the Closure Notice, and sets the Enquiry In Progress signal to ‘N’COTAX releases the repayment and reallocation inhibitions that were created by setting the enquiry In Progress signal to ’Y’ but reapplies fresh inhibitions on automatic repayments and reallocations for 14 days. The 14 day period should give you enough time to deal with the consequences of your enquiry, especially, for example, where you are amending more than one return at the same time
4.	If necessary, you can also
	Use Function MRSC (Maintain Rept / Realloc Signals (Company)) to inhibit reallocations or repayments to or from any AP of the company for a longer period

Reviewing the company’s accounting record

5.	Before you complete form 94 and draft the letter of offer
	Use Function VPPD (View Payment and Posting Details) to review the company’s accounting record for all relevant APs
	Include in the offer the whole of the finally agreed liability for APs subject to an open enquiry, and show credit for payments made

Existing assessments and penalty determinations

6.	Leave undisturbed any assessments (including self assessments) and late filing penalties on the COTAX record for relevant APs. Do not make any new ones

Payments

7.	Leave undisturbed any payments made against assessments, related late payment interest, and late filing penalties on the COTAX record for relevant APs which are included in the gross offer
8.	Treat, all such payments as 'paid against assessments' for the purposes of forms 94 and the SAFE stencil (see EM6403)
9.	If, exceptionally, the company has paid more than the liabilities recorded on COTAX so that the AP is shown as overpaid
	Do not include the overpaid amount within the amount you record as ‘paid against assessments’ in part 3 of form 94. Instead, show it further down form 94 as an amount to be reallocated against the settlement charge. Then follow steps 18 - 20 below

Informal Discharge

10.	You need to use Function RINF (Record Informal Discharge) to informally discharge all unpaid liabilities to tax, interest and late filing penalties for APs included in the settlement but see step 11 if it is a Quarterly Payer case
11.	Use Function DAPD (Display AP Details) to check if there is a posting for debit or credit interest on the COTAX record for the AP
	If there is, use Function MAPS (Maintain AP Signals) to set the Credit / Debit Interest Indicator (CDII) (Word 29KB) signal. This will prevent an unwanted recalculation of debit or credit interest after you have made an informal discharge
	On the same day use Function RINF to informally discharge the unpaid liabilities
	COTAX will then
	Cancel any suspension in force
	Ignore any interest accrued
	Inhibit any further output to the company
	Cancel any automatic remission by creating a minus remission posting for the same amount and class as the original

Interest

12.	Do not assume that the interest position reflected in the postings in Function VPPD is finally complete and correct
13.	Use Function CINT (Compute Interest) to calculate the correct interest due under S87A TMA 1970 up to the date when you expect the settlement charge to be paid
	Calculate interest on those duties included in the contract settlement
	Give credit for any interest already paid on the duties included in the settlement as ‘amounts paid against assessments'

Late filing penalties

14.	Exclude, for the purposes of the contract settlement, penalties determined and paid and leave the payments on the COTAX record
15.	If all or part of the penalty has not been paid
	Include the penalty in the contract settlement and give credit for any amount paid as an amount ‘paid against assessments’
16.	Where any late filing penalties have not yet been determined
	Do not make a determination
	Use Function MPEN (Maintain Penalty Signals) to set the ‘no penalty required' (NPR) signal
	Include the penalty in the settlement

Making set-offs against the settlement charge

17.	Follow the guidance at EM6043 - EM6408 and use the R90A procedure to set off a repayment due for an AP or duty outside the scope of COTAX against the settlement charge
18.	Use Function REOD (Direct Reallocation Out Of COTAX) if you need to reallocate an overpayment on the COTAX record to the contract settlement charge held by the Network Unit. (See subject, ‘Reallocation Out Of COTAX - Owning office’ (COM122060) in section ‘Non Automatic Reallocations’ in the ‘Repays/Reallocs’ business area)
	If the overpayment is for an AP outside the enquiry period
	Use Function RINT to calculate the correct repayment interest and enter it on the form CT251 that you send to Banking Operations
	If the overpayment is for an AP within the enquiry period
	You will have taken it into account in your calculations of interest included in the settlement, and no repayment interest needs to be added to the reallocation
19.	Whether you make the set-off under the R90A procedure or using Function REOD, you must enter the details on form 94 and the SAFE stencil
	Send form CT251 to Banking Operations asking for the money to be reallocated against the contract settlement charge
	Allow sufficient time for the set off to reach SAFE before issuing the stencil to the SAFE nominee
20.	If, exceptionally, an overpayment recorded on COTAX for an enquiry AP exceeds the amount you need to reallocate to cover the contract settlement charge, you should
	Reallocate the necessary amount using Function REOD
	Use Function DIRR (Direct Repayment) to repay the balance to the company, or Function REWD (Direct Reallocation Within COTAX) to reallocate it against other liabilities

Function MAPS

21.	Once you have made all the necessary changes to the COTAX record, you will need to tell COTAX that the enquiry has been concluded
22.	You will normally use Function MAPS (Maintain AP Signals) to
	Enter the enquiry Ended date equal to the date that the settlement offer is accepted
	Doing that will automatically set the enquiry In Progress signal to ‘N’
	You can view the changes to those two signals in Function DAPD (Display AP Details)
23.	However, if you have already recorded a Revenue Amendment (because the company or agent insisted on a formal Closure Notice - see steps 2 - 4 above)
	Do not use Function MAPS
	COTAX will have already automatically entered the Enquiry End Date, equal to the date of issue of the Closure Notice, and set the Enquiry In Progress signal to ‘N’ when the Revenue Amendment was recorded
	You can view the changes to those two signals in Function DAPD (Display AP Details) See subject ‘Closing An Enquiry: Non-Contract Settlements’ (COM71090) for further information on automatic computer processing
	Use Function MRSC (Maintain Rept / Realloc Signals (Company)) to uninhibit reallocations or repayments to or from any AP of the company (if you inhibited them at step 4 above)

Interaction with CQI or Caseflow

24.	If your office uses CQI or Caseflow
	Update it with the settlement details once the enquiry is settled in COTAX

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