Code of Practice 9 – Contractual Disclosure Facility

Just received a letter from HMRC regarding a COP9? …. Read on to find out all you need to know and how we can help you.

What is a COP9?

A Code of Practice 9 or COP9, for short, takes place when HMRC suspects serious fraud has taken place. A COP9 is offered to those willing to own up if HMRC is prepared to settle the tax liability civilly rather than criminally.

HMRC carries out the process under the Contractual Disclosure Facility (CDF) using their Fraud Investigations Service (FIS) team. The facility is only relevant to those willing to admit to fraud.

Contractual Disclosure Facility – Explained

The CDF offer is sent to suspected taxpayers by HMRC. It gives the taxpayer 60 days to make and Outline Disclosure (OD). The OD ensures that all tax irregularities are set out from the get-go. It is important to remember that HMRC receive all their information from several sources. They will not however, tell you, what information they have or what they suspect you of.

The onus in on you to make a full disclosure. Remember HMRC will not undertake a COP9 investigation unless they have substantial proof of the offense. You can’t use COP9 as a way of informing only careless mistakes, errors, or tax avoidance schemes. If you accept the offer, you are immune from criminal investigation and prosecution.

You will receive immunity only in relation to what you disclose but in return you must:

  1. provide admission your actions were deliberate
  2. co-operate with HMRC
  3. Disclose all irregularities and omissions

If you have received a COP9 letter you have three options:

  1. The Contractual Disclosure Route – you own up to everything.
  2. Denial – You deny you have done anything wrong
  3. Uncooperative – you keep ignoring HMRC and bury your head under the sand

It is important to remember if you admit to any fraud and wrongdoing then they will not criminally prosecute you provided you continue to adhere to the rules of the CDF.

The deadline date for accepting the offer and submission is printed on the top of the OD form. HMRC will not offer an extension under any circumstance.

Accepting the COP9

You submit OD to HMRC. This is a summary of the key facts. A specialist tax advisor will be able to concisely summarise everything you tell them.

You need to tell them:

  1. What fraud took place
  2. How it was committed
  3. The involvement of all people and entities
  4. How you benefited from the fraud

Once the OD is submitted, HMRC will check this against the information they have on you. If they are satisfied that you have disclosed everything, they will normally request a meeting, if you are attending in person make sure you take your specialist tax advisor.

To get the most out of your meeting and to ensure the facts are presented well you will need to spend a few hours with your advisor going through everything, they will make you aware of the wording HMRC will use in the report  and help you put some meat on the bones of your Outline Disclosure

After this your specialist tax advisor will prepare a full disclosure report on your behalf. This will include details of the irregularities, what lead to them, and the amounts involved. The full report should provide enough information to enable HMRC to understand the work done, and the reasons for any conclusion.  During this time your tax advisor should be keeping in touch with HMRC. They will be discussing openly with HMRC any contentious points. This open dialogue means the report is usually accepted quicker and without too much scrutiny.

HMRC can then if they want, test the report. Having an experienced advisor help minimise the chance of this happening. HMRC put a lot of trust in experienced advisors.

What happens if no fraud has taken place?

You sign and return the Contractual Facility Denial letter and pop in the post back to HMRC. If HMRC accept your denial and agree that no fraud has taken place, then you will be issued a letter that they are no long looking into you.

But…. (and it’s a big but) if you make a denial that is proven to be untrue, then HMRC can refer you to the Criminal Investigation Team.

Signing any contract with HMRC before seeking a professional’s opinion could hold major ramifications. Do not contact HMRC directly – they record every call, and this could be used against you at a later date

Remember they are only ever going to issue you a COP letter if they have enough information on you.

Ignoring HMRC

Being an ostrich and burying your head in the sand to ignore HMRC, means they will keep investigating your tax affairs. This has potential to lead to a civil or criminal prosecution. If HMRC are successful, then the penalties will be much higher than if you played ball from the start.

Should you get professional help

It is incredibly hard for a non-specialist advisor to advise on a CDF case as HMRC do not divulge any information they have on you before or during an investigation. HMRC actively encourage those under investigation to seek ‘independent advice’

By speaking to a professional advisor like us you will reduce the cost of the investigation and greatly improve your chances of an advantageous outcome. It can also help to reduce the stress of an investigation knowing you have a professional in your corner.

We have a list of frequently asked questions on COP9 here

If you wish to contact us to discuss your COP9 letter or any other tax issue, then please get in touch

How we can help

Edge Tax has years of experience with HMRC. We will explain HMRC tax investigations in an easy-to-understand way, support and thoroughly defend you throughout the enquiry or disclosure process. Our role will be to identify and obtain the best settlement for you by presenting robust technical arguments, mitigating your potential tax liability, penalties, and interest.

HMRC guidance on COP9 can be found here


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