If HMRC suspect a business or individual from committing tax evasion or tax fraud they can pursue the matter either as a civil procedure or by starting criminal proceedings. If HMRC use the civil route, this is referred to as COP9 and will be dealt with using specific procedures defined in Code of Practice 9.
As soon as HMRC have issued a COP 9, they offer individuals the opportunity to disclose the tax fraud. This process or offer is referred to as the Contractual Disclosure Facility (CDF). In line with the Contractual Disclosure Facility there are usually two options. The first is for the tax payer to own up and the second is to not reply to the CDF. If you accept the terms of the CDF, you will need to submit an outline disclosure which will present full details of your tax affairs which must be submitted to HMRC within 60 days of you receiving the CDF offer.
If the offer is accepted by both parties, HMRC will request that you attend a meeting. Although attendance at the CDF meeting is not compulsory it does help if you attend because it will show that you are willing to cooperate.
Being subject to any kind of tax investigation can be a challenge. Not to mention the associated stress from the process. Facing action from HMRC is a step away from being investigated on a criminal level for tax fraud. Therefore, it is important that if you receive a letter from HMRC offering a full contractual disclosure facility, it is strongly recommended that you find a specialist firm who can explain the process in detail and discuss the implications.
The Investigation Process
Previously, when HMRC issued a COP 9 notification, the recipient would normally have been immune from prosecution for the offence. Even where tax payers did not cooperate with the COP9 investigation, HMRC still could not remove this immunity. However in January 2012, new conditions were established that set out conditions to secure immunity to prevent prosecution.
As a result, if an individual does not reply to the Contractual Disclosure Facility offer, the outline disclosure becomes invalidated and HMRC will believe that the CDF offer has been rejected. If this happens, they could launch a criminal or civil investigation for the tax fraud.
It is really important that anyone who has committed tax fraud or they have been notified that they are under investigation, speaking to a professional tax specialist is absolutely essential. Tax specialists such as ourselves can offer professional representation and help you deal with the entire investigation process from start to finish. When this relates to someone who has received a Contractual Disclosure Facility, the importance of seeking advice increases. If incorrectly represented, it can increase the risk of being prosecuted or the individual could incur significant tax penalties at the very least.
Our experienced team of tax inspectors have specialist knowledge of HMRC systems and processes. They can help all kinds of individuals in a range of situations, resolving the most complex of cases. What's more, they will use their advanced expertise in the COP 9 Procedure and the Contractual Disclosure Facility. Churchill Tax Investigations can help you negotiate with HMRC and draft in depth reports that minimise the penalties that you will have to pay.