These are enquires conducted by HMRC’s Fraud Investigation Service under Code of Practice 9(COP9), where they suspect serious tax evasion and fraud to have taken place.
What can I do when I receive a notice from HMRC under COP9?
There are 3 options available to you:
Agree to cooperated with HMRC and admit irregularities
Ignore the notice
Deny any fraudulent actions
Agree to Cooperate – what does it entail?
The process is intrusive and long running and will involve intensive questioning by HMRC but it is a structured code of conduct which means that it is set out how HMRC will conduct their investigation whilst protecting the rights of the taxpayer who is the subject of the enquiry.
HMRC will not give an indication of their suspicions during the initial stages but in exchange for a full disclosure of the irregularities committed within 60 days they will offer immunity from prosecution. This is a signed agreement called the Contractual Disclosure Agreement (CDA). This is followed by a report prepared by their agent setting out the irregularities, both deliberate and otherwise, along with a calculation of the tax loss.
The report is a serious undertaking which will be thoroughly tested by HMRC before they enter into a settlement agreement and conclude their investigation.
On conclusion of the process certificates of full disclosure will be signed together with certificates detailing bank and credit card accounts. Any material errors or omissions from these signed documents may result in criminal prosecution.
Ignore the Notice – What Next?
Should the taxpayer choose to ignore the notice, HMRC will commence its own investigation which may move fairly quickly to a criminal investigation which may end with a prison sentence.
Even if criminal proceedings are not taken a settlement in these circumstances will invariably end with higher penalties of up to 200% of the tax lost to be levied and possibly publication of the details under the name and shame regime.
The offer of the contractual disclosure facility only covers those frauds that are admitted on the outline disclosure and therefore if there are further deliberate omissions that come to light, HMRC will again reserve the right to criminally investigate.
Deny Fraud – What can HMRC do?
As is the case with ignoring the notice, HMRC will continue with their enquiry and the taxpayer would run the same risks of possible custodial sentence, higher penalties and naming and shaming
What if I am aware that I have committed tax fraud or tax evasion but have not yet been challenged by HMRC under COP9?
In this case you have 2 Options:
Make a disclosure under COP9
Ignore and wait for the challenge by HMRC
ONLY BY MAKING A VOLUNTARY DISCLOSURE CAN YOU SECURE IMMUNITY FROM PROSECUTION
What Hentons can do?
The consequences of a COP9 enquiry can be highly damaging for the individual concerned and most accountancy professionals have little or no experience in dealing with this type of case. It is very important for anyone who receives a COP9 enquiry notice that they seek specialist advice from an experienced tax investigations practitioner at the earliest opportunity. With staff who have over 30 years experience of such cases, Hentons are able to offer this specialist advice.
What will we do?
Meet with you to discuss what has taken place and agree a strategy for taking matters forward with HMRC.
Work to minimise the stress a tax investigation can cause by dealing with HMRC on your behalf. This means that, other than an initial meeting at the start of the tax investigation and possibly a closure meeting, you are unlikely to have to meet or speak to a tax inspector during the course of the tax investigation.
Ensure that you make a full disclosure so that you do not risk criminal prosecution or being named and shamed.
Seek to minimise your tax liability
Move to take the initiative from HMRC
If you have received a COP9 notice or believe you may have committed tax fraud, please contact Greg Langley, for a confidential and no obligation discussion. We are happy to have an initial free of charge meeting with prospective clients.