EM6417 - Contract Settlement: Post Settlement Issues - Reopening a Settlement: Procedures When Repayment Due

The guidance about contract settlements at EM6000+ only relates to direct tax. You must never include VAT or VAT penalties in a contract settlement.

You should

• agree the amount of the repayment with the taxpayer or agent
• make it clear that the proposed repayment is ex gratia, and
• complete the Repayment Stencil SAFE 1 (S). You will find this in SEES>Forms and Letters
• submit the case for authorisation by the Business Unit Head. You should make your report in duplicate. A signed copy should be held in the Enquiry papers for nine years. In addition, the Business Unit Head should keep an electronic copy in the BMoEI folder for the same period. See KAI Records Retention site (Reopening a Settlement).

When the repayment has been authorised ask the SAFE Nominee to reduce the SAFE charge by the amount of the repayment, see EM6408, and

• issue the repayment stencil to the SAFE Unit.

If the SAFE Nominee cannot amend the charge or it is a non-SAFE charge you should issue the Charge Amendment Stencil SAFE 2 (S) with the repayment stencil. A signed duplicate of this stencil should also be retained in the enquiry papers for nine years.

Notes of the revised amount of the settlement and the date of the authorisation of the repayment should be made, in all cases

• in red ink on the Permanent Note of the settlement, and
• on CQI Diary.

If the repayment occurs in the same reporting year as the settlement, the team leader should enter the amended figure on CQI.