SDLTM82660 - Compliance: Concluding an enquiry

Contract settlements: Introduction: General

This section is concerned with the settlement of enquiries by contract settlement. This will be the most common way for settlement to be reached in an enquiry where there are interest and penalties.

Where penalties are being sought an enquiry should normally be concluded by means of a contract settlement. A compliance caseworker should be careful not to issue a closure notice or anything that could possibly be mistaken for such a notice because the issue of such a notice would start the penalty time limits running.

See SDLTM82600 if a Tax tribunal has made a direction.

If the purchaser or agent insists on the issue of a formal closure notice before negotiation of a contract settlement, then this should be done.

The purchaser should be advised that the issue of a closure notice will have the effect of bringing all the outstanding liabilities into the statement of account and enforcement action may be started before the contract settlement has been finalised.

It is essential that if a closure notice is issued it includes the amendments that the compliance caseworker has concluded are necessary as a result of their enquiry.

Once a contract offer has been accepted, it has the same effect as the issue of a closure notice. The transaction(s) included in the contract become final, and no further enquiries into those transactions can be made, unless it is considered that the conditions for making a discovery assessment are satisfied.

Contract settlements will cover transactions where there are open enquiries or where the enquiry window has closed and discovery assessments can be made.

Admissibility of evidence FA03/S98

In any criminal proceedings, proceedings for tax recovery, proceedings for a penalty or a related appeal where the purchaser has been told that the Board of HM Revenue & Customs will accept a monetary settlement and not pursue a criminal prosecution if they make a full confession. Any statements and documents made on behalf of that person are still admissible in court.