Code of Practice 9

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Code of Practice 9 “COP 9” Tax Investigations

Have you received a Code of Practice 9 (“COP 9”) letter from HMRC?

Definitely don’t ignore it. This is a very serious matter, with strict time limits with the risk of it escalating into a criminal prosecution if the taxpayer does not co-operate. Speak to our specialists at Morris Wheeler Churchill help and discuss what options are available with a COP 9 enquiry.

What is a COP 9 Tax Investigation or Contractual Disclosure Facility

Facing a Code of Practice 9 or COP 9 tax investigation can be very stressful. These investigations are initiated by HMRC’s Fraud Investigation Service (“FIS”) if there is a suspicion of tax fraud. This type of tax investigation incorporates the Contractual Disclosure Facility (“CDF”). The taxpayer will be given the opportunity to make a full disclosure of deliberate and non-deliberate conduct which resulted in a tax loss to HMRC.

Information held by HMRC before starting a COP 9 enquiry

If HMRC suspects that an individual or individual has committed tax fraud and failed to disclose all alleged tax irregularities they can launch a criminal investigation which could lead to prosecution. However, HMRC may decide not to go down the criminal path (which may involve a dawn raid with the police) and pursue the suspicious tax errors by the civil route instead – COP9.

The COP9 process

When a Code of Practice 9 or COP 9 tax investigation is underway, there are strict guidelines to be followed:

· Within 60 days of the date of HMRC’s letter the taxpayer the CDF forms must be completed and an outline disclosure made or there is a denial any fraudulent tax activity. A denial will result in HMRC controlling the investigation with no immunity from prosecution.

· If some tax fraud has been admitted in the outline disclosure forms returned to HMRC and this outline is accepted by HMRC then HMRC will provide an immunity from prosecution provided there will be a full disclosure and co-operation.

· The outline disclosure should include:

  • A description of the deliberate conduct (that resulted in a loss of tax)
  • The Individuals and business entities involved
  • The period of time over which the deliberate conduct took place
  • The approximate amount of tax, duty etc that you believe is owed as a result of the disclosure
  • A description of what records are available to support the disclosure
  • Any other information thought to be relevant
  • Details of any non-deliberate tax irregularities
  • A full disclosure must be made of all tax irregularities over a specified time period (up to a maximum of 20 previous years)
  • Agree to pay all interest, tax and penalties which result from the investigation
  • Cease any tax evasion activities with immediate effect
  • The person under investigation will be invited to attend a meeting with the investigating Officers. There is no compulsion but a failure could be deemed to indicate a lack of co-operation
  • A payment on account is expected and should be paid if it is possible to do so
  • A full disclosure report is compiled by the adviser covering the agreed scope

Make a statement of truth to confirm that you have provided accurate and complete information.

If the individual under investigation fails to respond to the initial COP 9 letter, or fails to co-operate or the disclosure is insufficient, HMRC will consider whether or not to launch a criminal investigation

There is no strict tax-loss threshold for a COP 9 investigation to be opened, it will depend on the extent of the suspected fraud and, possibly, the compliance history of the taxpayer.

Can I make a voluntary COP 9/CDF disclosure to HMRC?

Yes, you can. In situations where someone wants to disclose to HMRC that they have committed an historical tax fraud on a voluntary basis then the COP 9/CDF process can be requested from HMRC. Provided the outline disclosure is accepted by HMRC then the immunity from prosecution will be granted. A voluntary disclosure can also potentially halve the penalties HMRC would apply if their Officers opened a COP 9 tax investigation first.

Immunity from prosecution

If the outline disclosure has been accepted by HMRC then an immunity from a criminal tax prosecution will be provided.

Seeking advice when a COP 9 investigation letter has been received

HMRC strongly recommend that anyone subject to a COP 9 tax investigation engages a professional tax investigations specialist who understands and is experienced with the COP 9 process.

How can our team of tax specialists can help you?

At Morris Wheeler Churchill , we employ the highest calibre and most experienced Ex-HMRC Tax Inspectors and Chartered Tax Advisors with specialist expertise in the management of Code of Practice 9 investigations. Our dedicated team of COP 9 specialists can help you:

  • Take control of the COP 9 investigation
  • Draft the Outline Disclosure Report
  • Meet with you and your accountant
  • Meet with HMRC and agree a report strategy
  • Gather the information required as part of the report
  • Provide advice on the best possible options under the COP 9 CDF
  • Submit a full report within the COP 9 Contractual Disclosure Facility
  • Negotiate with HMRC to reach a full and final settlement
  • Negotiate with HMRC a suitable payment plan, if required

We know that this can be a stressful time and we can help make the process of responding to HMRC and the COP 9 a little easier. Contact our team today to find out how we can help you with your Code of Practice 9 tax investigation.  Call us on 01279 464400 for a consultation with a tax investigation specialist.

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