Contractual Disclosure Facility Code of Practice 9
HMRC’s Code of Practice 9 - Contractual Disclosure Facility - investigations are the most serious and worrying of all civil tax enquiries. COP 9 is titled: 'Investigations where we suspect tax fraud'. It is used where the taxman believes he has strong evidence of tax being under-declared due to serious tax evasion - but has decided not to prosecute: but only on the condition that the recipient co-operates fully.
Code of Practice 9 Contractual Disclosure Facility (CDF) investigations are carried out only by HMRC's elite Fraud Investigation Service (FIS). Investigators in FIS are the SAS of Her Majesty's Revenue & Customs. FIS is staffed by highly trained, experienced and committed tax fraud investigators. They conduct tax investigations where they suspect Tax Fraud (i.e. tax evasion). COP9 enquiries can cover all taxes: Corporation Tax, Income Tax, Capital Gains Tax, NIC, PAYE and VAT.
The Fraud Investigation Service issues Code of Practice 9 if they believe they have solid evidence of serious tax evasion and the total yield of tax, interest and penalties will be a minimum of £100,000. Penalties in most COP 9 cases will range from 35-200% of the tax the inspector thinks has been evaded. COP9 offers the opportunity to avoid prosecution by making a full disclosure. Where the tax investigator thinks an incomplete disclosure has been made, or where there is a 'denial' of irregularities, they may try to prosecute: and much higher penalties will be sought.
It is essential you take proper advice from qualified and experienced professionals. The CDF has two phases. Anyone issued with CDF Code of Practice 9 has to reply with an 'Outline Disclosure' (or ‘denial’) within 60 days. That does not allow much time to take specialist advice and appoint an experienced adviser. FIS will review the Outline Disclosure to decide whether to allow the taxpayer to proceed with the protection against prosecution of COP9; or whether to proceed on a no-immunity basis. The second phase is the preparation of a Full Disclosure Report. A badly managed Code of Practice 9 Contractual Disclosure Facility case can lead to a long running and deeply intrusive investigation.
Lynam Tax Investigation Experts have experience of proving to the taxman that a significant number of COP9 cases were investigated for incorrect reasons, and we have had a number of cases closed with no additional money to pay. We have even been able to get HMRC to reimburse our clients' fees. However, on the whole, CDF COP9 cases are usually started on the basis of firm evidence and need to be taken very seriously.
What does it mean for me?
COP 9 offers the chance to avoid prosecution and keep penalties down - but it requires you to produce a Full Disclosure Report. A thorough and professional Disclosure Report will keep you out of prison and reduce your penalties. A badly prepared report increases your risks. Contractual Disclosure Facility investigations can be very intrusive and stressful. The procedures are clearly set out in COP9 but have many pitfalls for the inexperienced. Failure to deal properly with a CDF investigation can lead to the case being referred to the Criminal Taxes Unit, which may result in Criminal Prosecution, and at best will lead to a long drawn out investigation with high penalties; which can be up to 200% of the extra tax they say is due. If HMRC feel that an inadequate disclosure has been made they can publically 'name and shame' the taxpayer, and put them on the Managing Deliberate Defaulters programme.
How can Lynam Tax Fraud Investigation Experts help me?
Lynam Tax Enquiry Experts have vast experience of successfully dealing with COP 9 investigations and CDF cases; relieving their clients’ stress and negotiating optimum outcomes. We can help you save tax, interest and penalties. We can save you years of stress, worry and disruption. And we can help you avoid a criminal investigation.
Nb. If you, or your client, have received an HMRC Code of Practice 9 you need specialist help now. Do not delay.
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Call Paul Lynam now: on 0845 643 9997
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