IHTM36251 - Instalment offers: general

A cash offer is obviously always preferred to an instalment offer because

• we would receive the penalty payment sooner
• at less cost, and
• there is much less risk of default.

This means that there will be cases in which a moderately substandard cash offer will be preferred to a more precisely calculated instalment arrangement.

But if you need to consider a formal instalment arrangement (IHTM36252), you must take into account how much the taxpayer can pay at the outset and by way of instalments. The arrangements may vary to take into account the particular circumstances. The length of the payment period (IHTM36254) should not normally exceed 5 years and you will need to refer any arrangement that lasts more than 2 years.

If you agree to payment by instalments the penalty will have to be recalculated (IHTM36253) to compensate for the three factors mentioned in the first paragraph. This may need to be revised in the event of an early settlement (IHTM36256).

Instalments are payable by standing order (IHTM36255).

The instalment arrangements are to be incorporated into the letter of offer (IHTM36345).