CONTRACT

Offer and acceptance - liability for income tax - cashing of cheque tendered in full and final settlement - not amounting to extinguishment of liabilityInland Revenue Commissioners v Fry: ChD (Mr Justice Jacob): 30 November 2001The taxpayer negotiated with the Inland Revenue over payment of her tax liability.

She had no assets and bankruptcy threatened.

Her husband wrote stating that should the Inland Revenue accept their offer it should present the enclosed cheque for 10,000 for payment and if it did so the taxpayer would take it as acceptance of an offer in full settlement of her liability.

The cheque was cashed on receipt by the Inland Revenue cashier but shortly thereafter the taxpayer was informed that the offer was unacceptable.

The Inland Revenue claimed 113,082 from the taxpayer in respect of the outstanding liability.

Guy Newey QC (instructed by the Solicitor of Inland Revenue) for the claimant.

Simon John Edwards (instructed by Howard Kennedy) for the taxpayer.Held, upholding the claim, that the issue was whether the taxpayer's liability was extinguished by a contract whereby the Inland Revenue was to be taken as having agreed to accept 10,000 to extinguish the debt; that it was fundamental to the existence of a binding contract that there was a meeting of minds between the parties; and, that although a unilateral offer prescribing the manner of acceptance could be accepted by the offeree acting in accordance with that manner, the cashing of the cheque by the Inland Revenue gave rise to no more than an irrebuttable presumption which had been clearly rebutted; and that accordingly the taxpayer failed to establish the existence of a contract to extinguish her liability to pay the tax in full.