HMRC’s Fraud Investigation Service (FIS) undertakes serious investigations on both a criminal and civil basis. There are three main types of serious tax investigations, which all have different implications.
Types of serious tax investigations
HMRC Code of Practice 9 investigations
HMRC investigate cases of suspected serious tax fraud under the Code of Practice 9 (COP 9) process.
What is Code of Practice 9?
Code of Practice 9 (called COP 9 for short) is a form of tax investigation. HMRC uses the COP 9 civil procedure where there is a suspicion of deliberate conduct, including tax fraud. You may be offered COP 9 by HMRC or you can make a voluntary application to use the procedure. If accepted, HMRC will agree a civil settlement with you in respect of taxes owed under the Contractual Disclosure Facility (CDF).
How should I respond to a COP 9 notice?
Essentially you have two options depending on your situation. If you know you owe tax due to deliberate or fraudulent actions, you must provide an outline disclosure setting out the details within a 60-day time limit. You must also include details of non-fraudulent matters where tax is owed. The second option is to deny tax fraud.
HMRC strongly encourage people at this stage to obtain specialist advice from a tax expert prior to making a response.
What are the implications of COP 9?
Providing that you make a full and complete disclosure, HMRC will not criminally prosecute you for any tax offences you have committed, although it is likely you will be charged a penalty as well as any tax and late payment interest.
You will normally be invited to a meeting by HMRC under COP 9. Although you are not obliged to attend, it is often beneficial in terms of showing co-operation with HMRC, which may reduce the amount of any penalty you may be charged.
HMRC Code of Practice 8 investigations
HMRC normally uses the Code of Practice 8 process (COP 8) for civil procedures in cases where tax fraud is not necessarily suspected but where the arrangements being investigated are complex, high value and may include some element of suspected tax avoidance.
Arrangements involving the use of structures or entities outside of the UK are commonly investigated under COP 8.
Criminal tax investigations
If you receive a letter from HMRC stating that you are being investigated with a view to prosecution or you are arrested, you will require legal representation. Our team works with a number of leading law firms who specialise in this area and we can arrange for you to have immediate legal representation.
If you are facing a criminal tax investigation, you or your legal adviser should call us immediately on 0800 008 6816.
Talk to Evelyn Partners about serious tax investigations
Our experts are here to help. We will fully brief you on the COP 9, COP 8 and criminal tax investigation process and manage every aspect of your disclosure to HMRC.
For more information, call our team.
Frequently asked questions about serious tax investigations
How long do I have to respond to a COP 9 notice?
You must respond to HMRC within 60 days. If you fail to do so, HMRC will treat you as having denied tax fraud.
What is the disclosure report under COP 9?
The disclosure report sets out the details of your tax irregularities and how and when they arose. Although HMRC does not prescribe the format of the report, when acting as an adviser, we will agree the scope of the report with HMRC, usually after the first meeting.
Am I required to meet with HMRC as part of the COP 9 process?
It is not mandatory as part of the COP 9 process for you to meet with HMRC. However, HMRC will usually ask to meet you at the beginning and possibly again at the end of the process. For our clients, meetings are typically hosted at one of our offices across the country or remotely. HMRC view attendance of these meetings as a sign of goodwill in bringing your tax affairs up to date.
How much are the penalties following COP 9?
A number of factors will determine whether penalties will be payable and at what level. Higher penalties will apply in respect of deliberate or fraudulent conduct and where steps have been taken to conceal the tax fraud.
When do I have to pay the tax owed?
As part of the COP 9 process, HMRC may request payments on account whilst your disclosure report is being prepared. Any payments made will reduce the amount of interest on late paid tax in the final settlement.
If you cannot pay the amounts owed, we can negotiate the time to pay as part of any settlement reached with HMRC.