HMRC only opens Code of Practice 9 investigations when it suspects tax fraud so responding correctly is essential. Read our FAQs on COP9 and find out how we can help you resolve the situation.

COP9 investigations are the most serious tax investigations conducted by HMRC. Given that tax fraud is a criminal offence, anyone receiving notice of a COP9 investigation needs to respond very carefully and with the right adviser by their side.

Unlike typical HMRC enquiries, in COP9 investigations HMRC doesn't request any information. Instead, it gives recipients a ‘one-time offer’ to enter into its Contractual Disclosure Facility (CDF).

How we can help?

We are experts in resolving COP9 investigations swiftly, ensuring our clients pay only the right amount of tax, interest or penalties. 

Our team includes former senior HMRC Fraud Investigation Service (FIS) inspectors, including those with experience in the FIS criminal investigation unit. Consequently, we understand how HMRC approaches these disputes and can help you decide on your best course of action, as well as develop bespoke strategies to address HMRC’s concerns effectively and promptly.

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What is the Contractual Disclosure Facility?

The CDF is disclosure opportunity based on a contractual agreement between you and HMRC. The terms of the contract are straightforward; If you accept HMRC’s CDF offer and fully cooperate with HMRC by submitting a full and accurate disclosure, HMRC will agree not to commence a criminal investigation in respect of any tax fraud you're involved in.

The CDF offer will only be issued at the outset of a COP9 investigation. It's a one-time opportunity to enter into an agreement that offers you immunity from criminal prosecution.

Only those who have committed tax fraud should accept the offer. The CDF is only suitable for you if your deliberate behaviour has brought about a loss of tax, duty or payment administered by HMRC.

Why does HMRC think I’ve committed fraud?

HMRC has access to a wealth of information from third parties and other governmental departments. If you’ve received a COP9 letter, it's almost certain that HMRC holds information which leads it to believe that not only is your tax position is incorrect but that you know it is incorrect.

The precise nature of HMRC’s information will differ in every case. However, if there are deliberate irregularities in your tax affairs, and HMRC has issued you with a COP9 letter, there's a strong chance that HMRC holds information that supports its convictions.

How is a COP9 investigation different from a criminal investigation?

An investigation under Code of Practice 9 is conducted on a civil basis. This means HMRC’s focus will be on recovering any unpaid tax and then charging an appropriate financial penalty.

Conversely, when HMRC conducts a criminal investigation, its primary focus is on securing a criminal prosecution. While HMRC will also make efforts to recover the unpaid tax, rather than charging penalties, it will be seeking a custodial sentence for any guilty parties.

Should I accept the CDF offer?

Accepting the CDF offer is only appropriate if you have committed tax fraud. Whether you have committed tax fraud or not will depend on your knowledge and intentions. If you knowingly elected not to comply with your tax obligations, accepting the CDF offer is the only chance you’ll be given to guarantee immunity from criminal prosecution.

When accepting the CDF offer, you're admitting to having committed fraud. This will mean that HMRC is able to charge significant financial penalties.

We would always encourage those with deliberate irregularities in their tax affairs to accept the CDF offer. This is because while an expert adviser can help you to reduce your penalty exposure, no adviser can secure immunity from prosecution should you fail to accept HMRC’s CDF offer.

What happens if I reject HMRC’s offer?

If you haven't committed tax fraud, you must reject the CDF offer. While rejecting the CDF offer is likely to prompt further HMRC investigation, an expert adviser will be able to represent you through the process and communicate with HMRC on your behalf. Ultimately, HMRC will be seeking to establish whether there has been a loss of tax, and if there has, the underlying behaviour that led to that loss of tax.   

We would urge you to speak to a recognised tax dispute professional as soon as possible after receiving the letter. While you have 60 days to respond, those 60 days can pass very quickly. Reputable advisers will review your tax affairs in the 60-day window and help you to decide the appropriate course of action.

What will HMRC be looking at?

COP9 investigations look at your tax affairs holistically. The investigation could conceivably incorporate your tax affairs as an individual, a company director, a trustee and an executor. 

In cases involving tax fraud, HMRC is granted powers to reconsider the accuracy of a person’s tax affairs over the past 20 years. However, a COP9 expert adviser will work hard to identify the limitations of HMRC’s powers during the early stages of the investigation. In doing so, it will be possible to narrow the scope of the investigation, thereby ensuring it will be resolved more promptly and cost-efficiently.

HMRC’s assessing time limits will vary depending on multiple factors. Expert advisers will use that knowledge to ensure that you don’t pay any unnecessary tax, interest or penalties.

What penalties can HMRC charge?

HMRC is able to charge a penalty on all deliberate and careless tax irregularities; the level of the penalty will depend on your particular circumstances. In cases of deliberate conduct for an offshore irregularity, HMRC could charge a penalty equal to 200% of the underpaid tax.

Our COP9 expert advisers will work your case in a way that minimises your penalty exposure as far as is lawfully possible.

Does issuing COP9 grant HMRC greater powers?

No. HMRC has a wealth of powers granted to it under the various taxation acts. Issuing COP9 doesn't grant any additional powers.

While COP9 investigations should be taken very seriously, it's important to push back if and when HMRC oversteps. Appointing a tax disputes specialist that thoroughly understands the limitations of HMRC’s powers can ensure that COP9 investigations are resolved more swiftly and without unwarranted intrusion on your privacy.