What is a COP 9 Disclosure request?
A Code of Practice 9 (COP 9) disclosure request is a formal process used by HMRC to investigate cases of suspected serious tax evasion and will come from the Fraud Investigation Service department at HMRC.
The process is designed to give individuals and businesses an opportunity to make full disclosure of their tax irregularities in exchange for reduced penalties and the possibility of avoiding criminal prosecution and begins with the receipt of a Contractual Disclosure Facility (CDF) letter.
What happens in a COP 9 Investigation?
Opening the COP 9 investigation
- HMRC has reasonable grounds to believe that the taxpayer has engaged in serious tax evasion.
- The taxpayer will receive a CDF letter advising that there will be a COP 9 investigation. Though HMRC advises that they will not normally tell you what their suspicions are, in our experience, they will usually give a rough outline of the allegations.
- The taxpayer is offered the opportunity to a Contractual Disclosure Facility (CDF) which is an agreement that the Taxpayer will winningly provide all evidence required of any wrongdoing and will, in return, avoid criminal prosecution.
Note that the investigation will continue with or without the taxpayer’s cooperation, but not engaging with the CDF could result in, amongst other things; criminal charges, higher penalties, and assets being secured, if wrongdoing is proven.
Acceptance into CDF
- To be accepted into the (CDF) the taxpayer must confirm their willingness to cooperate and disclose the full extent of their irregularities
- The taxpayer must complete an accurate disclosure within 60 days of acceptance. Failure to do so may result in the withdrawal of benefits under CDF.
- Once full disclosure is made, HMRC will calculate the liability and the taxpayer will have the opportunity to negotiate terms of settlement.
- Criminal prosecution is avoided if terms are agreed upon.
Rejection of CDF
- If HMRC finds the taxpayer’s disclosure inaccurate or incomplete it can reject the taxpayer’s participation in the CDF.
- This could lead to criminal prosecution and more severe consequences.
What do we advise if you receive a COP 9 letter from HMRC?
- Do not ignore the letter. This is a serious investigation by a specialist department within HMRC and can result in criminal liability.
- Take advice from a tax investigation expert.
- Act promptly, do not delay. You only have 60 days to accept or decline the CDF.
- Do not accept the CDF if you have done nothing deliberately wrong or if there was no intention to defraud.
- Accept the CDF if you have intentionally/deliberately committed tax fraud, as this is your immunity from criminal prosecution if you correctly comply with the process.
HMRC states “As a rule, the more you cooperate, the lower the penalty will be.”