HMRC Code of Practice 9 Tax Investigations
Code of Practice 9 (COP9) is a UK tax investigation procedure that HMRC use in cases where they suspect serious tax fraud. The procedure is incredibly intense, stressful and intrusive. You should never attempt to deal with a case conducted Code of Practice 9 without advice and representation from a UK tax investigation specialist.
Code of Practice 9 (COP9) investigations are conducted by senior HMRC officers within the Fraud Investigation Service. You can read more about teams within HMRC’s Fraud Investigation Service by visiting the link below:
Fraud Investigation Service
Code of Practice 9 (COP9) enables HMRC to formally investigate your tax affairs over a 20 year period. However, their initial approach is to give you the opportunity to disclose any problems yourself. This is done in the form of a full report under the Contractual Disclosure Facility. A disclosure report under Code of Practice 9 is a time-intensive, hugely technical and incredibly far-reaching piece of work. You need to ensure it is both accurate and comprehensive. In fact, it would be fair to say that it needs to be watertight.
In their opening Code of Practice 9 letter, HMRC will recommend that you seek representation from a tax investigation specialist. It is advice you should heed. They will also ask you to attend an opening meeting, where you will be given the first opportunity to disclose any irregularities. Never attend an opening meeting without the support of a tax investigation adviser.
What is Code of Practice 9?
Code of Practice 9 is only issued as part of the Contractual Disclosure Facility and is solely used by HMRC Fraud Investigation Service. Code of Practice 9 is a leaflet which sets out HMRC’s position on dealing with cases of suspected, deliberate tax evasion. It also explains how to take part in the contractual disclosure facility process. It explains the implications of admitting to deliberate tax fraud, the procedure once an admittance of deliberate tax fraud has been filed and the benefits of making a full disclosure to HMRC thereafter.
The offer to take part in the Contractual Disclosure Facility (CDF) and the issue of Code of Practice 9 are only undertaken where HMRC suspect serious tax fraud. Please remember that by using this facility you are admitting to a deliberate, serious tax evasion.
What does Code of Practice 9 say?
Code of Practice 9 details the legislation and procedures used by HMRC where they suspect serious tax fraud has been committed.
- This is your one-off opportunity to make a complete disclosure of all tax irregularities – in effect this is your chance to make a “clean breast of things”
- If you decide to take part of the Code of Practice 9 process, you must admit to deliberately not declaring all of your income. This also includes deliberately making claims for tax reliefs, expenses or VAT that you know are incorrect and not due – you should never lose sight of the word “deliberate” in this context. It will drive the nature, scale and outcome of any subsequent disclosure you make
- That you also need to declare any non-deliberate errors as part of the COP 9 / CDF procedure.
- Materially false statements can lead to a criminal investigation and prosecution.
- You have 60 days from the date of receipt of the COP 9 letter to decide whether to part in the Contractual Disclosure Facility and outline the nature and scale of deliberate fraud committed to HMRC in writing.
- If you do not return the COP 9 forms to HMRC within 60 days; they will treat your non communication as an effective denial. This will mean that HMRC will launch their own investigation into your tax affairs. This will lead to heavier penalties and the strong possibility of a criminal investigation.
COP9 letter and leaflet
Code of Practice 9 offers you two different options:
- Admit to deliberate tax fraud and commit to taking part in the contractual disclosure facility
- Deny deliberate tax fraud; by either stating that specifically or by not replying to the Code of Practice 9 letter.
The leaflet explains how you should complete the relevant outline disclosure forms. It is vital that you seek specialist professional advice before doing so. Failure to complete the outline form correctly; even innocently, will lead to HMRC refusing your request to take part in the CDF process.
COP9 investigation Procedure
HMRC’s handling of the case will be determined by the material items disclosed as part of the initial outline of tax irregularities. You should never underestimate the importance of submitting an accurate and substantive outline. If you are expressing a wish to take part in the CPF by admitting deliberate tax fraud; the last thing you want at this stage is for HMRC to refuse your application. They will deal with you as if you via the denial route or simply treat you as if you had not returned the outline forms. This will be viewed as a lack of co-operation; with potentially serious consequences. Aside from harsher penalties you could find yourself before the courts and in prison.
You can read more about the Code of Practice 9 process by visiting the link below:
Code of Practice 9 process
What do I need to do if I receive a COP 9 letter?
- Firstly; try not to panic – You will find no scare mongering words on this website. Nor will you find unnecessary fluffiness just to try and make you feel better. We will give you the straightforward no nonsense support and advice that you need to come through this. COP 9 is a serious procedure; but remember HMRC are offering you an olive branch. Come forward with an admittance and full disclosure of your tax irregularities and they will not prosecute you.
- Be decisive and act – You simply must seek professional advice and support when undertaking any form of contact with HMRC during the COP 9 process. HMRC strongly recommend that you seek specialist support in their opening letter.
- Accountant or tax investigation specialist – You should always choose a tax investigation specialist; as opposed to you own or a new accountant. Smaller bespoke firms; specialising in COP 9 work invariably offer a better service than larger firms of accountants. That includes accountants listed in the so called Big 5. The protocol when dealing with a large firm is totally different than when dealing with a dedicated tax investigation practice. Larger operations are impersonal; where the partner will often deal with the sign-up process only to pass your case on to one of his less experienced team members. When Admiral Tax represent you; your COP 9 disclosure or investigation will always be handled by our Director of Investigations. You can read Dominic’s profile here. Never allow yourself to become an anonymous name on a very expensive invoice.
- If you decide to accept HMRC’s offer to take part in the COP 9 / CDF procedure, then you must firstly outline the nature, scale and extent of tax irregularities perpetrated. This needs to be sufficiently detailed to give HMRC a summary of the matters to be disclosed. It need not be forensic. Your appointed tax investigation adviser will be able to deal with this correctly for you.
- Once your outline disclosure is filed, HMRC will review this against the information they hold. If the investigator is satisfied, they will write to you confirming that your outline has been accepted. They will likely request a meeting check what you have stated in the outline disclosure matches the information HMRC holds.
- If the inspector is satisfied that you have disclosed all material tax issues you will be notified of this in writing and HMRC will usually request a meeting with you and your adviser.
- Should HMRC decide that they are unable to accept your outline disclosure; because they feel it is inaccurate or incomplete then they will write out to you confirming this and informing you that they will be launching their own investigation into your tax affairs. This could either be a civil or criminal investigation.
- If you outline is accepted, and a meeting is requested. It is vital that you prepare properly. Your adviser will brief you on the standardised elements of the meeting; together with clear advice on what you need to prepare and/or bring to the meeting.
- At the meeting HMRC will ask you and your adviser to prepare a full disclosure report of all irregularities within an agreed time frame.
- It is vital that your adviser communicates regularly with HMRC during the report preparation process. There will likely be interim, progress meetings between HMRC and your representative to ensure all parties are satisfied. This should also minimise the level of scrutiny once your full disclosure report is submitted.
- Once your report is submitted HMRC will then compare and test the report; against the information they hold. This will be a risk-based assessment. Your honesty and the appointment of the right tax investigation specialist is vital at this stage. Mistakes; however well-meaning can be extremely costly.
- HMRC are not always correct in their assertion that deliberate tax fraud has be committed. If you feel that HMRC have got something wrong or have acted unfairly then you should speak with a tax investigation specialist immediately.
- Should HMRC pursue their own investigation after you adopt the denial route, then you should assess all requests for information and documents carefully. This is not simply a question of you “having nothing to hide”. You should think carefully before supplying information of documents to HMRC that they are not legally entitled to see.
Admiral Tax is here to help
Admiral Tax can support you through the entire Code of Practice 9 (COP9) process.
- Review your tax position thoroughly
- Negotiate the scope with HMRC
- Work with you to complete a full disclosure report
- Attend all meetings with HMRC
- Negotiate a final settlement, including tax, interest, and penalties
- Secure you time to pay if required and appropriate
- Advise you on future good practice
Regardless of scale if you:
- Have received a letter from HMRC Special Investigations or civil investigation of fraud, informing you that they are investigating you under Code of Practice 9
- Have been asked to make a full disclosure of your tax affairs
- Have concerns regarding tax fraud or tax evasion generally
Please seek specialist advice immediately.
Further important reading
Please do take some time to read through our detailed guidance on the investigation of suspected tax fraud below: