How to respond
The letter will include an offer to the individual to apply for the Contractual Disclosure Facility (CDF) under COP 9, if accepted into this facility, the individuals and businesses’ tax affairs will be reviewed under a civil rather than criminal framework.
The offer is time limited, and requires an individual to respond to HMRC within 60 days either:
- Making an outline disclosure in respect of taxes owed and requesting to be accepted into the CDF. Acceptance is at HMRC’s discretion and should be granted provided you tell HMRC of all your deliberate behaviour that brought about a tax loss. The CDF contract protects you from criminal prosecution provided you continue to co-operate with the process and make a full disclosure.
- Rejecting the CDF offer. If you do not believe that you have brought about a tax loss knowingly, HMRC will review and verify any statements that accompany your rejection.
If you do not respond to HMRC’s CDF offer within the 60 days, HMRC will treat this as a rejection of the offer and could result in a criminal prosecution for lack of co-operation.
Which taxes are considered?
A COP 9 investigation covers any of the taxes, duties, levies, or payments that HMRC administer.
HMRC have the power to assess the past 20 years, if you knew tax was owed and did not report this or knowingly submitted tax returns with incorrect figures.
A COP9 investigation letter will always be issued to an individual. Where this individual is a director and/or shareholder of a company, the business tax affairs can also form part of this investigation.
Appointing an advisor
HMRC strongly advise that you should seek independent professional advice. This can be from your regular advisor or an advisor who specialises in COP 9 investigations.
A COP 9 specialist will understand the full process and work with you from the initial letter until conclusion. They will be able to outline your options and provide advice tailored to your specific circumstances.
Do I have to wait for HMRC to offer COP9/CDF?
No, if you want to make a disclosure to HMRC and the tax loss arose due to your deliberate behaviour, you can ask HMRC to issue COP9 to you at any time.
Making a voluntary disclosure should secure protection against criminal prosecution and result in lower penalties, as you have approached HMRC on an unprompted basis.
HMRC would issue a COP9 investigation, and your chosen advisor will disclose the tax matters to HMRC in similar process.
Scenarios that could benefit from COP9/Contractual Disclosure Facility
- An individual who is operating their business through a company. This business has been operational for several years and they have not filed any UK tax returns (personal and company).
- Mixing of personal and company expenses and not dealing with this correctly for tax purposes. We typically see this with owner managed businesses through a lack of understanding that a company is a separate legal entity.
- Importing goods from outside the EU (prior to 2021) and reducing the value on the customs declaration to reduce customs duties and input tax.
- Not declaring all income on personal or business tax returns. This could be a second till within a business or receiving cash for business goods such as scrap metal, or an offshore bank account that is accruing income and/or gains.
- False or inflated invoicing, where tax deductions are taken for non-existent costs.
The above list is not exhaustive yet reflects that a COP9 investigation could be launched in many different scenarios.
How we can Evelyn Partners help me?
If you have recently received a COP 9 letter or are considering making a voluntary disclosure to HMRC of deliberate conduct, we can help.
Our Tax Dispute Resolution team is comprised of COP9 specialists who know the process inside and out and with a track record of achieving positive outcomes for clients.
Addressing the situation early is essential to ensure the best possible result is achieved. COP9 is the only HMRC disclosure facility which provides an assurance of no criminal prosecution.
You can speak to us at any time on 0800 008 6816 or 0202 8334 1010 or email us at firstname.lastname@example.org
Approval code: NTAJ14082350
By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. This briefing does not constitute advice nor a recommendation relating to the acquisition or disposal of investments. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication.
Tax legislation is that prevailing at the time, is subject to change without notice and depends on individual circumstances. You should always seek appropriate tax advice before making decisions. HMRC Tax Year 2023/24.