The Commissioners of HMRC will pursue a criminal investigation with a view to prosecution where they suspect tax fraud. The Commissioners may decide to investigate using the Code of Practice 9 (COP9).
If you receive a COP9 you will be given the opportunity to make a complete and accurate disclosure of all your deliberate and non-deliberate conduct that has led to irregularities in your tax affairs. If
HMRC suspects that you have failed to make a full disclosure of all irregularities, the Commissioners reserve the right to start a criminal investigation with a view to prosecution.
The term ‘deliberate conduct’ means that you knew that an entry or entries included in a tax return and/or accounts were wrong, but you submitted it/them anyway, or that you knew that a liability to tax existed but chose not to tell HMRC at the right time. In the course of the COP9 investigation, if you make materially false or misleading statements, or provide materially false documents, the Commissioners reserve the right to start a criminal investigation into that conduct as a separate criminal offence.
HMRC issue this Code of Practice in selected cases where they suspect tax fraud. In many cases they carry out criminal investigations of suspected fraud with a view to prosecution. However, under this Code, they instead offer you the chance to make a full disclosure under a contractual arrangement called a Contractual Disclosure Facility (CDF).
You have 60 days to respond once an offer is made. If you make a full disclosure of your deliberate conduct, HMRC will not pursue a criminal investigation with a view to prosecution. However, they do expect you to stop any deliberate conduct that has led or may lead to a future tax loss immediately.
A specially trained authorised officer will handle the COP9 investigation into your tax affairs and you will be given a named contact. If you co-operate fully with their investigation, you will achieve a greater reduction in any penalty found to be due. You may also be able to avoid other civil sanctions such as insolvency and, in some cases, the publication of your name and details.
If you receive a COP9 it is important that you discuss it with your tax adviser, if you have one.