Cheating Revenue Tax Evasion Charge

Being accused of “cheating the revenue” is a serious tax crime in the UK. It means that someone has intentionally tried to avoid paying taxes. This can lead to substantial fines, and in severe cases, it may result in criminal charges and imprisonment.

In recent years, HMRC and the Crown Prosecution Service (CPS) have increased their efforts to combat tax evasion. The CPS now has a Central Fraud Division, which helps prosecutors take complex tax fraud cases to court more effectively.

If you have received a COP9 letter or are being investigated for possible tax evasion, it’s important to understand how these processes work and how to protect yourself.

What Is Cheating the Revenue?

Cheating the revenue is a broad offence that covers any deliberate act of dishonesty intended to deprive HMRC of tax. Examples include:

• Failing to declare all taxable income
• Hiding or transferring funds offshore
• Creating false invoices or expense claims
• Running undeclared cash businesses
• Using complex tax schemes that go beyond avoidance into fraud

Unlike simple mistakes or carelessness, cheating the revenue involves intent. This is why HMRC treats it as fraud and pursues it under its specialist fraud investigation powers.

The penalties for cheating the revenue can be extremely severe, including prison sentences of up to life imprisonment in the most serious cases, though in practice, sentences are usually much shorter and proportionate to the fraud.

How HMRC Investigates Tax Evasion

When HMRC suspects tax fraud, they use two main approaches:

Civil investigations under COP9 (Code of Practice 9): This is offered when HMRC believes fraud has occurred but is prepared to settle through full disclosure and financial penalties rather than prosecution.

Criminal investigation: If HMRC wants to make an example of a taxpayer or believes the fraud is serious, they can proceed directly to a criminal case.

In both situations, HMRC investigators often work closely with the police and CPS to gather evidence.

What Is a COP9 Investigation?

A COP9 investigation is the civil route HMRC uses when it suspects serious tax fraud.

The COP9 Letter: If HMRC issues a COP9 letter, it means they suspect you have deliberately misrepresented your tax affairs. Along with the letter, you will be offered the Contractual Disclosure Facility (CDF).

The Contractual Disclosure Facility (CDF): The CDF is effectively a deal between you and HMRC:

• You admit to deliberate tax irregularities
• You provide a full and honest disclosure of all irregularities
• In return, HMRC agrees not to pursue a criminal prosecution for the disclosed behaviour

You have 60 days to accept or reject the offer. If you do nothing or deny wrongdoing, HMRC may escalate the case towards criminal prosecution.

What Happens After Acceptance?: If you accept the CDF:

1. You must provide an Outline Disclosure of the fraud within the 60-day window.
2. HMRC will then require a Full Disclosure Report, often prepared with the help of professional advisers, which details all irregularities, unpaid tax, and how they occurred.
3. Settlement negotiations will follow, including:
   • Repayment of unpaid tax
   • Interest on the unpaid amounts
   • A penalty, which can range from 30% to 200% of the tax, depending on cooperation and the seriousness of the fraud

If handled correctly, this process can resolve the matter without the need for criminal charges.

When Does the CPS Get Involved?

Not all cases stay within the civil COP9 framework. HMRC refers more serious or complex cases to the Crown Prosecution Service (CPS).

The CPS decides whether:

• There is enough evidence to bring a prosecution
• It is in the public interest to proceed

Because tax evasion undermines public trust and government revenues, the CPS is often under pressure to prosecute high-profile or serious offenders.

If prosecuted and convicted, penalties can include:

• Custodial sentences (prison)
• Unlimited fines
• Confiscation of assets under proceeds of crime legislation
• Long-term damage to your business, career, and reputation

Key Steps if You Are Under COP9 or Facing a Tax Evasion Charge

Seek Specialist Advice Immediately: These investigations are complicated and must be handled quickly. It’s essential to work with a tax adviser or lawyer who has experience in HMRC fraud cases. Attempting to manage this process independently can be very risky.

Decide on Your Response to the CDF: If you receive a COP9 letter, you must quickly decide whether to accept or reject the CDF. Accepting means admitting deliberate behaviour but usually avoiding prosecution. Rejecting may be appropriate if you genuinely have nothing to disclose—but it also increases the risk of a criminal investigation.

Be Honest and Complete in Your Disclosure: If you choose to accept the CDF, your disclosure must be full and truthful. Partial or misleading disclosures are considered dishonest and may result in prosecution.

Cooperate Fully: Your level of cooperation directly affects the penalties HMRC applies. Prompt responses, clear communication, and willingness to provide records will help your case.

Prepare for Possible Criminal Action: Even if you enter the CDF, HMRC can still refer your case to the CPS if they believe your disclosure is incomplete or if the fraud is especially serious. Always be prepared for this possibility with the assistance of legal representation.

Why Early Action Makes a Difference

The earlier you act, the better your chances of resolving the case without prosecution. Quick and professional intervention can:

• Reduce financial penalties
• Limit the scope of HMRC’s investigation
• Protect your reputation and business interests
• Increase your chances of avoiding a criminal record

Ignoring the problem or delaying action almost always exacerbates the situation. Being accused of tax evasion is a serious challenge for individuals and businesses. The UK authorities, including HMRC, are intensifying efforts to pursue offenders. Receiving a COP9 letter doesn’t always lead to prosecution; you can seek a civil settlement through the Contractual Disclosure Facility if you act quickly and cooperate. It’s essential to get expert advice immediately. With the right support, you can navigate the process, minimise penalties, and protect yourself. If you’ve received a COP9 notice, contact our specialist COP9 accountant to safeguard your future.