Code of Practice 9 (COP9) Investigation.

Code of Practice 9, also known as the Contractual Disclosure Facility (CDF), is a civil investigation carried out by HM Revenue & Custom’s (HMRC) Fraud Intelligence Service (FIS) where they suspect that tax fraud has been committed.

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What is Code of Practice 9 (COP9) investigation?

This type of enquiry is the most serious type of civil investigation carried out by HMRC, however, they are generally only carried out when HMRC does not intend to criminally prosecute. This does not mean HMRC will not criminally prosecute, however, by accepting HMRC’s offer of COP9 and entering the CDF process, you will receive immunity from criminal prosecution in return for the following:

Making an admission of deliberate behaviour that led to a loss of tax
Making a full disclosure to include all omissions and irregularities (deliberate and non-deliberate)
Fully cooperating with HMRC throughout the process
Paying all tax, interest and penalties within the agreed period with HMRC

What should I do if I receive a Code of Practice 9 enquiry letter from HMRC?

f you receive a COP9 enquiry letter from HMRC you have two options – accept their offer or reject it.

Before responding to HMRC it is important that you seek independent professional advice, particularly from someone that has experience in these types of disclosures. HMRC state that ‘Many people find it helpful to appoint an advisor who specialises in COP9, as well as their regular advisor.’

If you have acted deliberately which has led to a loss of tax, then the COP9 process can be a good way to resolve matters in a timely manner with the peace of mind that you will not be criminally prosecuted.

That said, if you have not acted deliberately and HMRC’s suspicions are incorrect, then the CDF process would not be suitable as you will not be able to meet all of the conditions required to enter COP9 (as you cannot admit to deliberate behaviour leading to a loss of tax).

At Resolve Tax we have many years of experience in dealing with these types of enquiries and can provide the required expertise to navigate through these challenging enquiries.

Why Resolve Tax?

We have years of experience in dealing with the most serious and complex tax investigations and disclosures as , including Code of Practice 9 enquiries.

Resolve Tax is made up of ex-HMRC inspectors, who understand HMRC’s processes in detail. We can easily identify the most effective way to deal with a COP9 enquiry, and know how to navigate through them in the most effective way possible.

What happens if I accept the offer?

If you accept HMRC’s offer of COP9 then you will need to submit an outline disclosure within 60 days, detailing all deliberate and non-deliberate behaviour that has led to a loss of tax.

HMRC will not provide detail on what information they hold that leads them to suspect tax fraud and therefore it is important that careful consideration is given to the outline disclosure to ensure it is full and complete. Immunity from criminal prosecution only relates to those irregularities that are disclosed in full.

Once HMRC have accepted the outline disclosure, an opening meeting will be arranged to agree the scope of the enquiry and agree timeframes for all analysis to be undertaken and for a COP9 disclosure report to be prepared and submitted.

What happens if I reject the offer?

If the offer is rejected and no irregularities are identified, HMRC may decide that their suspicions are no longer valid and no further action is taken, however, it is more likely that HMRC will want to undertake a thorough enquiry outside of COP9 to establish if there are any irregularities.

If HMRC have sufficient evidence to support their view that tax fraud has been committed and the offer of COP9 has been rejected, they may still consider undertaking a criminal investigation and potentially prosecuting.

Should I appoint a specialist adviser?

Yes. HMRC’s own guidance suggests that they ‘strongly advise that you seek independent professional advice before you respond to HMRC’s offer of the CDF.’

There are many elements that could have a significant impact on the overall liability to HMRC including penalties and the number of years to be disclosed for non-deliberate or offshore issues.

At Resolve Tax we have plenty of experience in these types of cases, and can ensure that your case gets handled efficiently – minimising your financial exposure by applying the legislation correctly and mitigating penalties where possible, and dealing with matters promptly to reach a swift resolution.

I haven’t received a letter from HMRC but have under-declared tax in the past. What should I do?

You can make a voluntary disclosure to HMRC and there are numerous ways in which this can be done.

If the loss of tax results from deliberate behaviour then a request can be made to HMRC to make a voluntary disclosure under COP9. If accepted by HMRC you will receive immunity from criminal prosecution in the same way as if it was a prompted disclosure.