If the taxpayer proposes an acceptable figure for the penalty
then the offer will need to be put into writing, in the form of a
letter of offer (
IHTM36331), before the penalty is
settled. The draft letter of offer may have been issued when you
first informed the taxpayer that you are seeking a penalty (
IHTM36224) but if not a draft letter
should be issued at this stage.
This is important because for the settlement to be effective
it must normally result in a legally binding and enforceable
contract between the taxpayer and the Board. The contract comes
into existence when a letter of offer signed by or on behalf of the
taxpayer is accepted by or on behalf of the Board. It substitutes a
new liability under the law of contract in place of the previously
existing liabilities to tax, interest and penalties imposed by
Inheritance Tax Act 1984 and other legislation.
