Code of Practice 9 Investigations: Don’t Fall into The Pit of The Taxman

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CDF, Code of Practice 9 Investigations, Contractual Disclosure Facility, COP9 Investigation, Tax Evasion

HMRC is very adept when it comes to investigating tax fraud. When the tax office suspects that a serious fraud has been committed, they issue a Code of Practice 9 (COP9) which permits them to bring criminal charges against suspected tax evaders.

COP9 is the procedure HMRC follow when they suspect a taxpayer is attempting to avoid paying full tax.

The protocol is incorporated into the Contractual Disclosure Facility (CDF) and gives HMRC the right to pursue a criminal investigation. If necessary, court proceedings will be issued and tax evaders could face a prison sentence.

Needless to say, a COP9 order is a serious situation and should be handled by a professional and experienced tax advisor.

What Happens When HMRC Issue a Code of Practice 9?

HMRC will issue a COP9 when they suspect a taxpayer has not fully disclosed their tax obligations. The tax office has numerous ways of identifying tax cheats.

Where a taxpayer is suspected of tax irregularities, they will initially receive a CDF letter stating they are being investigated for suspected tax fraud.

Although tax officials have extended powers to bring criminal proceedings, their initial enquiry is not with a view to prosecution. Their ultimate goal is to recover unpaid taxes.

Taxpayers that do receive a COP9 notice must adhere to the following procedure:

Respond to the opening CDF letter within 60 days
Accept the charges or deny them and submit an outline of the disclosure together with the COP9 form
If you deny a fraud has been committed, you must provide a report giving full disclosure defending the accusations of tax evasion
If HMRC are still not satisfied full disclosure is accurate, they will commence criminal proceedings
Taxpayers that accept the CDF charges are obligated to pay the shortfall in taxes together with interest and a penalty.

Seek Professional Advice for CDF

HMRC treat suspected tax criminals very harshly. Some officers have the same powers as police such as powers of arrest and the right to execute warrants. It is not unheard of for HMRC to perform “dawn raids” to make arrests.

If you receive a CDF letter notifying you of a COP9 investigation, the best course of action is to seek professional advice and assistance from our qualified tax accountant. They will be able to help you prepare full disclosure.

As part of a CDF investigation, you will probably have to attend a meeting with HMRC prior to submitting full disclosure.

Should you fail to respond to the opening letter within the 60-day deadline, or if tax officials suspect full disclosure is inaccurate, HMRC will proceed with a criminal investigation.

It is vitally important that taxpayers respond to a CDF accurately. HMRC recommend CDF disputes should be handled by a qualified professional that specialises in tax fraud as they will be able to provide the correct guidance.

If you have received a CDF letter from HMRC, we recommend contacting one of our specialist tax accountant. We offer free advice with no obligation to use our services.