- Managing tax risk
- Code of Practice 8
- Code of Practice 9/Contractual Disclosure Facility
- Contractual disclosure of fraud
- Criminal investigations
- HMRC Campaigns and taskforces
- Offshore and voluntary disclosures Offshore and voluntary disclosures
- Tax risk Tax risk
- Tribunals and appeals
- Worldwide Disclosure Facility
Code of Practice 9 (COP9) is HMRC's most serious form of civil tax investigation.
Through COP9, HMRC offers individuals or entities suspected of tax fraud or evasion the opportunity to make a full disclosure of all tax irregularities via the Contractual Disclosure Facility (CDF).
The CDF offers the individual or entity the opportunity to enter into a contract with HMRC. In return for making a full and complete disclosure of all tax irregularities, HMRC will offer immunity from prosecution and the potential for mitigated penalties.
Taxpayers wishing to make a voluntary disclosure can also approach HMRC spontaneously to request making their disclosure via the CDF.
Why have I received a COP9 letter?
HMRC only sends out COP9 letters where it has reason to believe that serious tax fraud or evasion has occurred, through the deliberate actions of the individual or entity involved.
Whilst HMRC may make mistakes, HMRC only issues COP9 letters where it believes it has evidence to support its view that tax fraud or evasion has occurred. Receipt of a COP9 letter should therefore be taken seriously. HMRC will also expect taxpayers to engage with a professional adviser in dealing with the CDF process.
What does COP9 mean in practice?
You have 60 days to respond to HMRC's opening letter.
If you are offered CDF by HMRC, you have two choices. You can (a) co-operate with HMRC and accept the offer by making a disclosure via the CDF, or (b) reject the offer.
If you choose to co-operate with HMRC, HMRC will expect you to prepare a disclosure report and calculate any taxes due.
If you do choose to reject HMRC's offer, the chances of HMRC choosing to pursue a criminal investigation increase.
Throughout the CDF process, HMRC will consider your willingness to co-operate and assist with the investigation. This will have a direct bearing on the penalties charged. By coming forward and co-operating with HMRC, you will be in the best position to ensure the lowest possible penalties are charged.
COP9 for "Tax Avoidance Scheme" Users
HMRC has increasingly used COP9 as a means to pursue users of so-called "Tax Avoidance Schemes". It has most recently begun pursuing users of Clavis Trust/Herald Employment & Retirement Services Ltd (HERS) Employee Benefit Trusts.
HMRC is making a clear statement that such users are deliberately choosing to misrepresent their tax positions by investing their monies in such schemes, regardless of whether or not users believed it was perfectly legal.
If you are a user of a HERS scheme, or any other tax avoidance scheme, we recommend seeking professional advice in managing HMRC's enquiries going forward.
How can we help?
Our national team of specialist tax investigations professionals have considerable experience in managing, negotiating and delivering results for taxpayers disclosing via the CDF.
COP9 is an intrusive, arduous and lengthy process. By engaging Grant Thornton UK to assist you, we can manage the process with HMRC thereby minimising any interference it may have either on your business or your day to day life.