COP9 is a serious, in-depth tax investigation, and not a routine enquiry. Expert tax advice is essential given its complexities and the potential downsides of missing deadlines or risking criminal action.
Our expert Tax Dispute Resolution team specialises in tax investigations and voluntary disclosure work. We offer a bespoke service with small teams to support you through the CDF process, including partner-led advice.
What is COP9?
COP9, or Code of Practice 9, refers to HMRC's Contractual Disclosure Facility (CDF), which offers individuals immunity from criminal prosecution for tax offences in return for a full disclosure of tax fraud. The CDF is operated exclusively by HMRC's Fraud Investigation Service.
HMRC may offer a Contractual Disclosure Facility to individuals
who it suspects have committed tax fraud.
Taxpayers can proactively request CDF for voluntary disclosures,
which can be advantageous because there are lower penalties for
unprompted disclosures. The process begins when HMRC issues a
letter offering the CDF – this starts the clock on a 60-day
deadline to either reject COP9 or accept the offer by admitting
fraud and providing an Outline Disclosure.
What to do if you are issued with a COP9 letter
1. Decide whether to use COP9
The Contractual Disclosure Facility is only appropriate if you deliberately submitted incorrect tax returns or failed to comply with your tax obligations. If you admit to this, it is difficult to persuade HMRC to the contrary later without compelling evidence. If you don't admit fraud, then you cannot use COP9. Admitting deliberate mistakes may result in your details being published as a deliberate defaulter and HMRC placing you in its Managing Serious Defaulters' regime.
2. Cooperating with COP9
It's important to read the COP9 booklet issued by HMRC carefully so that you understand the process you would be signing up to. HMRC expects full cooperation if you enter the CDF. This includes personal attendance at the opening meeting which is viewed as "a strong indication of a person's engagement". Lack of cooperation can result in the withdrawal of criminal immunity or even larger tax-geared penalties.
3. Making a full disclosure
HMRC expects taxpayers to make full disclosures of all deliberate and non-deliberate mistakes, including explanations of how this behaviour caused the loss of tax for all years. Failure to do so may result in HMRC withdrawing the CDF. You should keep all records (paper and electronic) to support your disclosure. It is advisable to consult a specialist disputes accountant before making your disclosures, to ensure that they are as accurate as possible..
4. Making payments under the CDF
HMRC expects an upfront payment on account with further payments throughout the investigation - failure to do so is viewed as poor cooperation. Making payments on account can mitigate late payment interest charges. If you need time to pay by instalments (for example, so you can sell assets) then tell HMRC early to manage their expectations. Our specialist team has extensive experience dealing with HMRC's debt management and agreeing Time To Pay arrangements.
5. Do you need extra support?
You are encouraged to disclose circumstances that make it difficult to deal with the investigation. HMRC may adapt their process to support you, which may involve HMRC's extra support unit.
5. Seek expert advice from an experienced COP9 tax adviser
You should urgently seek advice from an expert tax adviser if HMRC offers you a Contractual Disclosure Facility, i.e. you receive a COP9 letter. Dealing with HMRC Fraud Investigation Service requires careful and proactive management of the case. It is important that your specific facts and circumstances are reviewed, and you work with the adviser to complete the process.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.