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In the event of a “severe” tax shortfall due to tax fraud or evasion, the UK’s HMRC (HM Revenue and Customs) typically initiates an investigation according to Code of Practice 9. Investigations under Code of Practice 9 are undertaken by the HMRC’s Fraud Investigation Service team. Comprising senior Tax Inspectors, this team tackles the most complicated and severe cases.
The only exceptions are unique cases so severe that the HMRC decides to pursue criminal action against the taxpayer.
Within the framework of Code of Practice 9, the taxpayer has a choice:
Through the Contractual Disclosure Facility (CDF), taxpayers are granted the chance to disclose all incidents of tax fraud fully to the HMRC, which, in return, provides them immunity from prosecution. Opting for this route will lead to a monetary settlement with the HMRC.
As per the CDF, taxpayers are obliged to provide an initial disclosure detailing all instances of tax fraud. This must be prepared within 60 days from the date they were invited to participate in the CDF procedure. Immunity from prosecution only applies to the areas addressed in the initial disclosure. If any significant details are omitted, the HMRC retains the right to pursue legal action.
Tax fraud, as defined by the HMRC, is a deliberate act, i.e., “a person knowingly participates in fraudulent tax or duty evasion, either by themselves or another person.” Accidental commitment of tax fraud isn’t possible.
The investigation process often commences with a formal meeting with the HMRC. In this meeting, the HMRC seeks additional information regarding the initial disclosure and the taxpayer’s personal and business affairs. Generally, taxpayers are expected to attend this meeting.
Subsequently, taxpayers are expected to task their tax adviser with preparing a detailed report showcasing the underpaid taxes, backed with as much evidence as possible to validate the newly disclosed figures. If sufficient documentary proof isn’t available to obtain exact numbers, assumptions and estimates will form part of the report. The HMRC will scrutinize all evidence within the report and rigorously assess any assumptions and estimates before reaching the final settlement.
By fully disclosing under the CDF, taxpayers can potentially lower the financial penalties that the HMRC might impose during the final settlement negotiation.
However, the repercussions of an inadequate disclosure are grave. If the HMRC discovers material discrepancies that were not disclosed in the report, they retain the option to elevate the case to a criminal prosecution.
We offer a comprehensive range of services to assist you during a COP9 investigation. These include:
We begin with an in-depth, confidential consultation. This meeting allows us to understand your unique situation and the specific details of your case. We will discuss the implications of a COP9 investigation and explain the process in detail. Based on this, we can then strategize the best course of action to tackle the investigation effectively.
Our team will represent you throughout the entire investigation process. With our extensive knowledge of tax laws and COP9 procedures, we will manage all communication with HMRC on your behalf. Our experts will present your case, respond to queries, and handle any issues that arise during the investigation.
A key part of the COP9 process is the preparation and submission of a comprehensive and accurate Disclosure Report to HMRC. This report forms the cornerstone of your case. Our team will assist you in gathering relevant information, carefully examining your tax records, and identifying any potential discrepancies. We will guide you in creating a thorough, precise, and transparent report. This meticulous approach helps in reducing the possibility of additional queries or complications, ensuring a smoother process.
The final stage of a COP9 investigation involves negotiating a settlement with HMRC. This can be a complex and challenging phase, which requires a deep understanding of tax laws and negotiation tactics. We will work diligently to reach a settlement that reflects a fair and accurate assessment of your tax position. Our negotiation strategy focuses on reducing penalties where possible, ensuring a resolution that is as favourable to you.
Code of Practice 9 (COP9) are investigations instigated by HMRC when they have evidence that a business or individual has conducted a serious tax fraud.
When HMRC suspects that a firm or individual has knowingly paid less tax or claimed more relief or grants than eligible to them, they will write to them a COP9 offer.
Once received a business has 60 days to get back to HMRC with their response.
Once you have received a COP9 offer there are essentially two options you can do to respond.
You will need to write back to HMRC with full disclosure, outlining what offences were carried out. You will need to detail how and why these were conducted alongside providing an approximate liability.
By accepting HMRC’s COP9 offer you also admit that these offences were conducted and are accepting you are guilty of aforementioned offences.
You are also offering to resolve the situation so that you do not continue to benefit from the exploitation of the scheme.
HMRC will review your response and determine whether the disclosure is sufficient to explain the anomalies in their records and whether they want to accept you into CDF, pursue prosecution or abandon the COP9.
You also have the option to refuse the COP9 offer. This means you claim innocence of the offence – HMRC will then conduct an official investigation of your and your business tax activity.
HMRC’s Fraud Investigation Services will assess your tax history which can be as far back as 20 years.
This process can be extremely tense and stressful, even if you are shown to be innocent in the end.
Always seek professional advice when dealing with HMRC especially to support when you are dealing with COP9. A mistake here could lead to criminal charges or worse.
Our tax compliance department team leader has a thorough understanding of the COP9 process, with over 25 years experience as a HMRC Tax Compliance Officer specialising in COP9 inquiry resolution and negotiation, and can provide you with expert guidance and representation throughout the investigation. Our team will work closely with you to:
By using our services, you can be sure that you are getting the best possible advice and representation throughout the COP9 process. We will work efficiently and diligently to resolve the investigation as quickly as possible, minimising any impact on your business operations.
Don’t let a COP9 enquiry disrupt your business or cause undue stress. Contact us today to schedule a consultation and learn more about how we can help you.
There are several benefits of letting MJ Kane handle your COP9 enquiry, including:
Our tax compliance department team leader has a thorough understanding of the COP9 process, with over 25 years experience as a HMRC Tax Compliance Officer specializing in COP9 inquiry resolution and negotiation. With a wealth of experienced tax professionals and a thorough understanding of the COP9 process we can provide you with expert guidance and representation throughout the investigation.
We understand that every case is unique, and we will tailor our approach to best suit your needs.
We will work closely with you to understand the nature of the allegations against you, review the evidence provided by HMRC, and prepare a detailed response to the inquiry. Our goal is to minimize the impact of the investigation on your business operations and to resolve the matter as quickly as possible.
We will represent you in any meetings or negotiations with HMRC, advise you on your rights and responsibilities, and help you to achieve the best possible outcome.
We have a network of professionals including lawyers, forensic accountants and other experts, with whom we can collaborate to provide a comprehensive support to our clients.
With years of experience in handling COP9 inquires, we have the knowledge and expertise to help you navigate the process and achieve a favorable outcome.
With our support, you can have peace of mind knowing that experienced professionals are handling your COP9 inquiry, leaving you free to focus on running your business.
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