Code of Practice 9

Code of Practice 9 (COP9) is the most serious basis on which HMRC can undertake a civil investigation. HMRC use COP9 where they suspect that the individual has committed serious tax fraud.

HMRC can only open a COP9 investigation if they have sufficient reason to believe that there has been an underpayment of tax and that this underpayment has been deliberately and fraudulently obtained. The Fraud Investigation Service will already have reviewed your/your client’s affairs and decided to proceed on a civil basis rather than criminal, however this can easily be escalated to a potential prosecution if the process is not correctly handled.

The COP9 process carries a lot of inherent risks for both the client and their adviser.

WHAT HAPPENS NEXT?

If HMRC have opened a COP9 investigation into your or your client, they will offer the opportunity to enter into the “Contractual Disclosure Facility” (CDF), this being the process under which they allow the client to (a) collate the relevant information and (b) produce a Report explaining any and all irregularities.

It is important that you/your client understand the process and implications of being offered CDF. A taxpayer has 60 days to respond to this letter and they have three options:

• Admit that they have been complicit in tax fraud and submit an “Outline Disclosure” of any and all irregularities. It is vital that specialist advice is sought prior to submission of this disclosure as HMRC may criminally prosecute if any additional issues are found during the course of the investigation. Equally, anything disclosed in the Outline Disclosure can be investigated by HMRC in detail.
• Decline to admit having been complicit in tax fraud and reject HMRC’s offer of CDF. Rejection of the CDF process will result in HMRC carrying out their own, detailed investigation on either a civil or criminal basis. The taxpayer’s rejection letter can be used as evidence in criminal proceedings.
• Ignore it. HMRC would consider a failure to respond within the 60-day time limit to be a rejection of their offer.

As part of the COP9 process, HMRC will usually expect to meet with you/your client face to face. We would strongly dissuade you from meeting with HMRC without specialist representation.

WHAT SHOULD I DO?

Tax evasion is a criminal offence and can carry a maximum prison sentence of life (Cheating the Public Revenue) in the most serious of cases. If you or your client have received any correspondence from HMRC that references COP9 or CDF, it is therefore imperative that you take specialist advice immediately. Failure to handle the process correctly could result in excessive penalties being applied and, potentially, criminal prosecution.

If the process is handled correctly then CDF should provide protection from criminal prosecution.

HOW CAN HAMILTON ROSE HELP?

Hamilton Rose have 30 years of combined experience dealing with COP9 – we know how to manage the process correctly to ensure that the case is not escalated to criminal prosecution, HMRC receive the correct amount of tax and that your best interests and assets are protected.

We will ensure that you are fully supported throughout the process and give you peace of mind that any historic UK tax inaccuracies are fully resolved.