S130 FA2008 gives HMRC legal power to set-off amounts to be repaid to a person against debts owed to us by that person, including contract settlements.

We do not need to seek authority from taxpayers before set-off takes place. Set-off will be at our discretion (and will not be reversible without our consent) or at the taxpayer's request. In particular, set off will mean that:

Repayments are set only against established debts. ‘Established debt’ is a quantified debt that is correctly payable either based on a return from the taxpayer or which has been assessed and either the appeal has been determined, or the period for appeal has passed.

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