You will normally be able to rely on an offence by the taxpayer to recover any tax or NICs lost. This will not always be the case. For example

• the taxpayer had a reasonable excuse for his failure EM5151 or he pleads successfully either that his incorrect returns (or accounts) were submitted innocently EM5180 (no neglect) for periods where the filing date for the return is on or before 31 March 2009
• for periods beginning on or after 1 April 2008 where the filing date for the return is on or after 1 April 2009, that the inaccuracy in the returns arose despite the taxpayer taking reasonable care, see CH81120
• the taxpayer has died and our right to assess is limited by TMA70/S40 (2)
• the taxpayer submitted a return (or accounts) at the proper time but we failed to open an enquiry in time.

In such circumstances the expected offer cannot include these duties, or related interest and penalties.

Nevertheless, it is considered that HMRC is justified in inviting voluntary restitution on equitable grounds.

You would then seek from the taxpayer or personal representative

• the amount of the expected offer, and
• the irrecoverable tax and NIC with simple interest but without any penalty.

This invitation should however be made only after the maximum penalty that could be charged and HMRC’s policy of abatement (or reduction for type and quality of disclosure, see CH82400+ for periods beginning on or after 1 April 2008 where the filing date is on or after 1 April 2009) has been fully explained. Where the suggestion of voluntary restitution is not accepted, it should not be pressed, any subsequent negotiations being conducted without reference to the irrecoverable sums. It will be appreciated that any offer in excess of the expected offer will be acceptable.

In the case of a deceased partner, it will not normally be necessary to consider a request for voluntary restitution in relation to pre-SA partnership liabilities EM7300+. Similarly, the death of a director of a company under investigation will not normally affect HMRC rights of recovery of company liabilities, EM8740.

If you need a letter of offer that includes voluntary restitution, please contact the Specialist Technical Team for advice, see Contact Link.