HMRC has updated its Code of Practice 9 (COP9) investigation procedure so that it can be used in connection with HMRC's non-tax functions. COP9 is a civil investigation of fraud procedure, that became effective on 14th June 2023. Learn more in our complete guide.
What is Code of Practice 9?
The Code of Practice 9 is used by the Commissioners for HMRC to investigate suspected cases of tax fraud. This is used in cases where a criminal investigation is not commenced. HMRC will not state what their suspicions are, and it is for you to decide whether to tell HMRC about your “deliberate behaviour” and any other tax or duty irregularities by making a disclosure.
In many cases where fraud is suspected, a criminal investigation is carried out with a view to prosecution. However, COP9 offers you a chance for a full disclosure to be made under a contractual arrangement called the Contractual Disclosure Facility (CDF). You are then given 60 days from the date of receipt of the CDF offer to accept or reject it.
What is Deliberate Behaviour?
“Deliberate behaviour” is defined as:
- Providing HMRC with documents that contain knowingly incorrect information
- Failing to inform HMRC about information you knew was pertinent to tax or duty liability
- Making a claim for payment from HMRC that you were aware you were not entitled to
Who Handles the Investigation?
An officer with specialised training will oversee the COP9 investigation concerning your tax matters.
Accepting the CDF
By accepting the CDF contract, you will be admitting that there is a loss of tax, duty, or payment administered by HMRC because of your deliberate behaviour. HMRC can then seek to recover any tax, duty and interest evaded and any associated penalties for a period of up to twenty years, or for a longer period where legislation exceptionally permits.
You commit to making a complete, accurate, open and honest disclosure of all deliberate behaviour and all other irregularities in your tax affairs. In return, a criminal investigation will HMRC commits not to open a criminal investigation.
You will have to:
- provide complete, accurate, open and honest disclosure of:
- all your “deliberate behaviour” bringing about a loss of tax or duty, or payment administered by HMRC
- all other irregularities in your tax affairs (including those caused by negligent behaviour such as careless errors)
- you must cease any intentional actions that have caused or may cause future tax or duty losses promptly
- all existing records including any computer records during the investigation must be kept regardless of the existence of a legal obligation
Do I Have to Accept the CDF Offer?
No, if you do not believe that you have brought about a loss of tax or duty, or payment administered by HMRC through your deliberate behaviour you should sign and return the CDF rejection letter, within the 60-day response period.
You should only reject the CDF offer if you genuinely believe that you have not brought about a loss of tax, duty or payment administered by HMRC through your deliberate behaviour. If you sign the Rejection Letter the HMRC will start their investigation which may be a criminal one.
What If I Don’t Cooperate with HMRC?
If you fail to collaborate, HMRC has the authority to:
- Initiate an inquiry that could potentially result in a criminal investigation.
- Utilise its HMRC abilities to access details about your financial and business matters, which may involve approaching relevant third parties such as banks, clients, and suppliers.
- Enforce formal measures, which may involve issuing assessments for any taxes, duties, or interest they deem owed.
- Impose notably greater penalties.
- Initiate legal actions to protect some or all of your assets.
- Demand financial assurances from you to cover specific outstanding taxes and duties.
How Our Solicitors Can Help
If you receive a COP9 offer, you have been suspected of committing tax fraud or tax evasion by HMRC. You have to make a very careful decision as the COP9 offer is the most serious civil investigation utilised by HMRC. Getting specialist advice at the early stages is crucial in managing the whole process and avoiding any criminal investigation and subsequent prosecution.
Our Tax Dispute Solicitors have years of experience assisting with such issues. Please get in touch with us today, or send us an email to info@witansolicitors.co.uk.
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