Code Of Practice 9: is it right for you?

COP9 is a serious, in-depth tax investigation, and not a routine enquiry - it means that HMRC suspect that you may have committed tax fraud. Expert tax advice is essential - the process is complex and the potential downsides of missing deadlines risk criminal action.

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.

You can proactively request a CDF for voluntary disclosures, which can be advantageous because there are lower penalties for unprompted disclosures. The process begins when HMRC issues you 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 a Contractual Disclosure Facility

The Contractual Disclosure Facility is only appropriate if you have 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 on 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 mean no 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. If you fail to make a full disclosure, HMRC might withdraw 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 Contractual Disclosure Facility

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. If you think you might owe a large amount of tax and are worried about paying it back, it is best to engage a specialist. 

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.

6. Seek 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 - ideally, as soosn as you receive a COP9 letter. Dealing with HMRC Fraud Investigation Service requires careful and proactive management. It is important that your specific facts and circumstances are reviewed, and you work with the adviser to complete the process.

How we can help

Our Tax Dispute Resolution team specialise in solving complex tax cases, especially where you might need to use the CDF or other disclosure facilities. We have a global network of experts to draw on, and decades of combined experience in working towards resolutions with HMRC. 

You can book a free, confidential appointment with one of our team to discuss how we can help you put your tax affairs right. It is always best to get a professional opinion before dealing with HMRC - start that process today.

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