EM6327 - Contract Settlements: Letters of Offer: Delay in Acceptance

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

Once made, an offer which is neither withdrawn nor rejected remains open for acceptance for a reasonable time. A maximum of six months is considered to be a reasonable time.

Where an offer is not accepted within six months of the date of the letter of offer because of

• the need for clarification of any points that are in the offer, or
• delay by in obtaining such clarification

you should ask the taxpayer within four months of receiving the offer to confirm in writing that they wish the offer, as it was originally submitted, to be considered for acceptance.

If the taxpayer confirms that they still wish to make the offer, you should request approval or rejection of the the offer following EM6402a or EM6402b, depending upon your business unit. If there are any concerns about the wording of the letter of offer, you should discuss there with your authorising officer, or if they cannot be resolved seek advice from ‘contact link’.

You should ensure that the letter of offer is submitted in good time for the acceptance letter to be issued within the six month period.

If they do not reply to any of your letters requesting clarification, you should reject the offer and give the taxpayer one more opportunity to make a new offer. If a new offer is not made you should issue the appropriate assessments and closure notices.