Code of Practice 9 Investigations (COP9)

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Our specialist Code of Practice 9 Investigation team

No other firm in England has such a unique skill set as our tax team.

• Andy Lynch is a partner whose experience prior to joining FWJ included 18 years at HMRC working for their National Tax Investigations Team. He has undertaken a significant amount of COP8 & 9 investigation work.
• Stephen Downie is a partner with significant tax experience and is also a qualified accountant and previously spent time working at the Insolvency Service.
• Pembe Ramadan previously spent 6 years at HMRC as an in house litigator. Pembe is a qualified Civil and Commercial Mediator and has attended over 60 First Tier Tax Tribunals during her career.
• Anita Sharma who is highly experienced in HMRC claims, often involving complex tax litigation, COP 9 investigations, Account Freezing Orders, tax investigations, appealing HMRC decisions and dealing with matters in the Tax Tribunal.
• Phoebe Pexton who specialises in a range of cases, such as tax investigations, Code of Practice claims and R&D tax credit defence.

Introduction to COP9 investigations

The Code of Practice 9 (COP9) is a process by which HM Revenue and Customs (HMRC) deal with serious cases of suspected tax fraud. The guidance outlines the process through which HMRC investigate and settle tax liabilities when the irregularity has taken place. COP9 is an essential tool for ensuring tax compliance and fairness within the tax system.

Triggering the process and what triggers it

The COP9 process begins when HMRC has reasonable grounds to suspect that a taxpayer has committed tax fraud and or a taxpayer wishes to voluntary disclose tax fraud. Once they have considered an outline of the irregularities, they may invite the taxpayer to participate in the Contractual Disclosure Facility (CDF) process under COP9.

COP9 investigations can begin for a number of reasons, most commonly these are;

• A taxpayer wishes to regularise their tax own position knowing that there are issues and wants to make a voluntary disclosure.
• HMRC is receipt of information which suggests that a taxpayers returns are inaccurate. This information can come from various sources such as foreign tax authorities who have agreed to share taxpayer data with HMRC, information generated from other law enforcement agencies, such the Police, NCA or the FCA, or information received direct from the public.

An increasingly common tactic is for HMRC to issue ‘nudge letters’ encouraging the taxpayer to come forward and make a disclosure. If you receive such a letter, you should not ignore, as HMRC will not away.

Contractual Disclosure Facility (CDF)

The Contractual Disclosure Facility is a fundamental element of COP9, which provides taxpayers with an opportunity to cooperate with HMRC in resolving their tax affairs. When HMRC invites a taxpayer to participate in the Contractual disclosure facility , they offer a contract. By signing the contract, the taxpayer agrees to provide full and accurate disclosure of their tax affairs, including the tax fraud committed. In return, HMRC commits not to pursue criminal prosecution for tax-related offences, provided the taxpayer cooperates fully and makes a full and accurate disclosure.

Disclosure Report

After signing the Contractual disclosure facility contract, the taxpayer must prepare or commission a detailed disclosure report within a specified timeframe. This report should contain all relevant information about the irregularities, the amount of tax underpaid, and any other inaccuracies in previous tax returns. The report should be comprehensive and transparent to benefit from the protection offered by the contractual disclosure facility.

Review and settlement

Once HMRC receives the disclosure report, they will review it carefully. If the report is complete and accurate, and the taxpayer has cooperated fully, HMRC will aim to settle the tax liability. The settlement will typically include the tax underpaid, interest, and penalties.

Penalties

Penalties following a COP9 investigation can be as high as 100% of the tax evaded and disclosed in the report. These penalties are mitigated by various factors such as the quality of the disclosure, an unprompted disclosure, and the time span of the tax fraud.

Rejection of Contractual disclosure facility

If HMRC deems the disclosure report to be incomplete or inaccurate, or the taxpayer fails to cooperate fully, the protection offered by the CDF will be withdrawn. In such cases, HMRC may proceed with formal civil or criminal investigations, leading to higher penalties or even prosecution if tax evasion is proven.

Importance of professional advice

Participating in the COP9 process is a complex and sensitive matter. Taxpayers are strongly advised to seek professional advice from tax advisors or specialists with experience in dealing with HMRC investigations and disclosures. Professional advice can ensure that the disclosure report is accurate and comprehensive, maximising the chances of a fair and manageable settlement.

• the Code of Practice 9 process is an essential tool for HMRC to tackle tax avoidance, whilst offering taxpayers a way to rectify their tax affairs without facing criminal prosecution.
• by cooperating with HMRC and making a full and accurate disclosure, taxpayers can resolve their tax liabilities and avoid more severe consequences. However, navigating the COP9 process requires careful attention and professional guidance to ensure a successful and fair outcome for all parties involved.

Our tax dispute team at FWJ are highly experienced in dealing with HMRC Investigations and COP9 investigations. We can take a lot of the stress and worry away in the process and also help save you money. If you have any such worries, contact our team today for a confidential no obligation chat.

Or contact Partner and ex HMRC investigation specialise Andy Lynch today for immediate help.

Andy Lynch at FWJ was literally a life saver for me. I ran in to some tax issues with HMRC and I suffer from mental health issues as well so I was a complex case. Andy took his time to professionally and accurately layout my case and assist me with finding a resolution. I researched a lot of tax advisers before making my decision and I am glad I did and relieved that I chose Andy and FWJ.

Chris Kitchen

FWJ did precisely what it set out to do. I am extremely grateful for its assistance.

A client who had received a Request for Security from HMRC for a sum that would have caused their company severe financial difficulties. We helped them to have the entire bill withdrawn