SDLTM82730 - Compliance: Concluding an enquiry

Contract settlements: Expected offer: Means - General

There is no point in attempting to negotiate a contract settlement where the purchaser will clearly be unable to pay either by lump sum or by instalments.

However this is unlikely as the purchaser will usually still own the property or land which is the subject matter of the enquiry.

It should also be borne in mind that the majority of enquiries into individuals will probably relate to threshold manipulation where the tax at stake will be in the region of £5,000.

Where the purchaser says that they cannot meet a standard offer, or it appears that this is so, their financial position should be reviewed very carefully. It should be explained that the purchaser is expected to use every possible means to meet their obligations, especially where arrears arise from offences committed under Finance Act 2003.

A written statement of the purchaser’s means should be obtained

• drawn up at a very recent specified date
• certified by them as complete and correct
• including all assets and liabilities in the name of the purchaser or their spouse (if you can obtain their co-operation for this purpose) and children or anyone to whom the purchaser has transferred assets
• showing details of current income and out-goings

Ensure that details of any likely alterations in the next 3 to 5 years are highlighted such as

• the maturing of an endowment policy
• the termination of a lease affecting the value of the purchaser’s freehold interest
• impending retirement
• children leaving school
• loans paid off

The statement of assets and liabilities should be examined critically to see whether it can be reconciled with information on means obtained in the course of the enquiry.

There is the possibility of voiding transactions carried out by purchasers who dispose of their assets other than at their full market value in an attempt to avoid payment of tax. If a compliance caseworker is aware of any such transactions, and the purchaser is unwilling or unable to attempt to recover the assets themselves, Enforcement Office Insolvency Service should be consulted for advice.

To meet HM Revenue & Customs claim the Stamp Office should not normally deprive a purchaser of their livelihood.

It should be explained that the purchaser

must do everything in their power to meet the debt
is expected to realise all available assets, including surplus business assets or cash, to the extent that this will not affect continuance of their business

If this does not meet the full amount of the claim the purchaser should try to raise loans on the security of their assets such as their

• residence
• business premises
• life assurance policies

If the purchaser is unsuccessful they will need to provide evidence in the form of letters of application to prospective lenders and their replies (unless they are clearly not creditworthy).

Enforcement Office will consider bankruptcy proceedings where there are valid assessments giving rise to collectible tax or there is a contract settlement.