Fraud: Contractual Disclosure Facility and Code of Practice 9 (COP9)
It is always in the taxpayer’s best interests to contact HMRC voluntarily.
About the Contractual Disclosure Facility
HMRC prefers to deal with cases of suspected tax fraud through the Contractual Disclosure Facility (CDF) in accordance with the procedures set out in the department’s Code of Practice 9 booklet.
Under the CDF, taxpayers suspected of tax fraud receive a letter from HMRC offering the opportunity to make a disclosure. Taxpayers have 60 days to agree to the facility’s terms and provide an outline disclosure or deny any tax fraud has been committed. If no response is received within the 60-day period, HMRC assumes that the taxpayer has decided not to admit fraud or to co-operate.
It is better for taxpayers to own up to and disclose their shortcomings before HMRC catches up with them, even where fraud is involved. Taxpayers are offered immunity from prosecution, but only if they engage and co-operate with HMRC and meet the terms and conditions of the CDF, particularly the deadlines for making the disclosures.
Agreement to the CDF’s terms commits taxpayers to providing a full disclosure within a set period of time and completing a number of certificates. As part of that process, they may be invited to a meeting with HMRC. HMRC retains the option to conduct a criminal investigation in cases where co-operation breaks down or into matters not included in the disclosure.
Not coming forward
Anyone with undeclared tax relating to offshore matters faces very serious risks. Under the Common Reporting Standard, more than 100 countries have signed up to automatically provide HMRC with details of overseas income and assets on an annual basis. On discovery, especially if a taxpayer denies involvement in any tax fraud, HMRC may immediately commence a criminal investigation (up to six months in prison) by virtue of a strict liability offence, as well as a final penalty and inclusion on HMRC’s published list of deliberate defaulters.
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Confidential, no-obligation advice
Contact our experienced team
Any tax investigation or disclosure is sensitive and complex. Advice from our award-winning, specialist team will help your client navigate through the CDF process and achieve a positive outcome.
We know that every case is unique, sometimes requiring a robust stance to be taken with HMRC, sometimes needing a practical solution to be negotiated, at other times a discreet discussion. We take time to explain and clarify complex issues so that clients are kept fully informed throughout the CDF process. Our specialists ensure that the right amount of tax, if any, is paid in settlement of the case.
Relationship with HMRC
We have an excellent working relationship with HMRC’s Fraud Investigation Service and CDF teams and meet regularly to discuss how the facility is working in practice and associated issues.
Crowe is represented on important committees, such as HMRC’s Fraud Forum, the Enquiries and Appeals Committee at the ICAEW, the Tax Investigations Practitioners Group, and the Chartered Institute of Taxation’s Management of Taxes Sub-committee.
Cooperating with other advisors
To achieve the best outcomes for our clients, we work closely with other professionals, including accountants, lawyers, fiduciaries and bankers. We can work independently of existing advisors or in a peer capacity.