ECH21550 - Letter of Offer: Acceptance

Once a letter of offer is submitted it must be accepted by HM Revenue & Customs in order to form a legally binding contract.

A correctly worded letter of acceptance is equally as important as a correctly worded letter of offer. See EM6302.

On receipt of a letter of offer

• check it thoroughly, see ECH21525.

In cases of doubt or difficulty contact Tax Administration Advice (Newcastle) for advice. (This text has been withheld because of exemptions in the Freedom of Information Act 2000).

If the letter of offer is satisfactory arrange for acceptance locally unless

1. the total culpable liabilities amount to £100,000 or more
   
   
2. the ‘voluntary’ grossed up settlement amounts to £100,000 or more
   
   
3. the combined totals of (i) and (ii) amount to £100,000 or more
   
   
4. a penalty only offer where the underlying duties satisfy the above 3 senarios
   
   
5. an instalment arrangement will exceed three years
   
   
6. the offer differs from the expected amount to the extent that it cannot be accepted locally, ECH21130, EM6211

when the papers must be submitted without delay to the Authorising Officer.

Note:

Different criteria for referral to the Authorising Officer may apply in LBS and National Compliance. Referrals should be made in accordance with Business Stream practice.

The submission must

• include a report and a form 94(EC) (available on SEES).
• retain copies of the following in the review papers as the Authorising Officer may retain the originals
• • the letter of offer
  • any covering letter
  • the form 94(EC)
  • the report itself.

If the Authorising Officer accepts the offer they will return a signed acceptance letter, undated, for issue.

When the case is returned to the submitting officethe caseworker should

• arrange for the issue of the acceptance letter
• complete the Class 6 Contract Settlement Stencil
• Follow the SAFE accounting procedures ECH22075

A letter of acceptance should always be issued in the following terms.

On behalf of the Commissioners for Her Majesty’s Revenue and Customs I accept your (client’s) offer dated .......... to pay the sum of £.......... on the basis set out in the offer.

The amount of £.......... should be paid using the payslip which will be issued to you (your client) shortly.

Note

• The letter of acceptance has to be signed at HO level or above.
• The letter of acceptance must be issued within six months of the date of the letter of offer. If there are any delays see EM6327.
• The acceptance letter must be kept short and be limited to the essentials. For example, if any of the terms of offer were set out and these later proved to be incorrect the acceptance would be invalidated.
• The gross amount of the offer should be entered in the first paragraph, and the net amount to be paid, after all payments on account and so on, in the second paragraph.
• The acceptance letter should be addressed to the legal person(s) who have made the offer e.g. where ABC Ltd makes an offer (which is signed on behalf of the company by the directors, Mr and Mrs X) the legal person is ABC Ltd. Where the directors have made a joint and several offer with the company, the legal persons are ABC Ltd, Mr X and Mrs X. Where an agent is authorised to sign the letter of offer the acceptance letter should be addressed to the agent and the legal person named in the heading of the letter. It may be appropriate for a copy of the acceptance letter to be sent to someone other than the legal person. If this is the case an appropriate covering letter addressed to that person should be drafted and the copy attached to it.
• The final sentence should be omitted if the settlement is covered by payments on account or set offs and no further payment is required. If a locally acceptable offer is accompanied by a remittance for the balance due, the remittance should be acknowledged.
• If a specific date is given for payment of the balance due (or for the first instalment of an instalment offer) the letter of acceptance must be issued in time to reach the employer before the payment is due. The contract would be impossible to fulfil if the letter was not issued on time.

• When accepting an instalment offer insert 'and in the manner' after 'on the basis' and 'The first instalment of £..........' instead of 'The amount of £..........'.

The acceptance must be unequivocal. The terms of the offer must not be modified in the letter of acceptance and any attempt to do so could make the acceptance ineffective. If there is any more to be said a separate letter should be sent.