CODE OF PRACTICE 9

A Code of Practice 9 (COP9) enquiry is undertaken by HMRC where they suspect serious tax fraud has occurred and they wish to recover the tax on a civil basis rather than pursue criminal prosecution.

HMRC will invite the taxpayer to engage with them under the contractual disclosure facility (CDF) process.  It is important that taxpayers who receive a letter from HMRC offering them the CDF understand the process and implications of being offered the facility, as they only have 60 days to respond to HMRC to accept the CDF. Specialist advice must therefore be sought immediately.

If the taxpayer accepts the offer of CDF then they must admit that they have been complicit in tax fraud and provide an outline disclosure of the irregularities. This needs to be include all fraudulent defalcations as HMRC may criminally prosecute if additional issues are found during the course of the review.

Rejection of the CDF process will lead HMRC to consider to whether to investigate on a criminal basis or civil basis. The taxpayer’s rejection letter can be used as evidence in criminal proceedings.

Failure to respond within the 60 day time limit will be considered to be a rejection of the offer.

Why have I received this letter?

Before issuing the Code of Practice 9 (COP9) letter, the information held would have been reviewed by HMRC’s Fraud Investigation Service, who deal with suspected serious tax fraud and criminal investigations. HMRC believe that there has been an underpayment of tax and that this underpayment has been deliberately and fraudulently manufactured.

If you have received the COP9 letter then HMRC have decided to pursue your case on a civil basis and seek to recover the lost revenue.  However, failure to manage the COP9 process correctly could see your case being referred back to the criminal team and result in HMRC seeking prosecution. Tax evasion is a criminal offence (Cheating the Public Revenue) and carries the maximum prison sentence.

Due to the seriousness of the allegation, specialist advice should be obtained immediately upon receipt of the letter to ensure that process is managed properly.

HOW CAN LANCASTER KNOX HELP?

At Lancaster Knox our Tax Investigation specialists are industry recognised and have been successfully guiding clients through the Code of Practice 9 process for many years. This is a highly specialist area where the risks to the client include criminal prosecution so it is vital that a specialist is involved.

Lancaster Knox will work with you and your current advisers to ensure that the process is managed correctly and timely, that HMRC receive the correct amount of tax and the client’s interests are fully protected.