How to Handle a Code of Practice 9 (COP9) Tax Investigation

 Receiving a Code of Practice 9 (COP9) notice from HMRC can be a daunting experience. It’s not just any tax investigation—it’s a signal that HMRC has serious concerns about potential tax fraud or deliberate evasion. Whether you're an individual, a business owner, or a company director, the prospect of a COP9 investigation can feel overwhelming. But it’s important to remember that while the situation is serious, it is manageable with the right approach. With expert guidance and careful planning, you can navigate through the investigation and minimise its impact.

What is a COP9 Investigation?

A COP9 investigation is initiated when HMRC believes that taxes have been deliberately evaded. This isn't a simple tax enquiry—it’s a more serious investigation where HMRC suspects fraud or the deliberate underreporting of income or overstating of expenses. You might be under investigation because of discrepancies in your returns, hidden income, or assets not declared to HMRC.

When HMRC issues a COP9 notice, they are essentially offering you the chance to come forward and disclose all the facts surrounding your tax affairs. This is known as the voluntary disclosure process. By fully disclosing what’s happened, you may avoid criminal prosecution, although penalties will still apply.

 

Step 1: Seek Professional Help Immediately

I cannot stress this enough—if you’ve received a COP9 notice, your first step should be to seek professional advice. COP9 investigations are serious, and it’s not the time to go it alone. A tax investigation specialist will help you understand your rights, the investigation process, and what your options are moving forward. Attempting to handle this on your own can result in costly mistakes that could increase penalties or even lead to criminal charges.

Step 2: Understand the Voluntary Disclosure Process

The voluntary disclosure is your opportunity to come clean about any discrepancies in your tax affairs. This is crucial. By making a full and honest disclosure, you’re showing HMRC that you want to resolve the issue. While HMRC may still impose financial penalties, coming forward voluntarily may help reduce the severity of those penalties.

As a tax investigation specialist, I’ll work with you to ensure that your disclosure is complete and accurate. We’ll go through your records thoroughly, making sure nothing is left out. Full disclosure is the key to minimising the impact of the investigation.

Step 3: Gather Your Documents

Once you’ve decided to make a voluntary disclosure, it’s time to gather all the relevant documentation. This could include bank statements, financial records, invoices, and any other paperwork that supports your disclosure. It’s essential that all information is accurate and comprehensive, as any gaps in your disclosure could raise suspicion and potentially lead to harsher penalties.

Having an expert by your side ensures that all the documentation is prepared correctly. As your tax investigation specialist, I’ll help you organise the required materials and ensure everything is in order for submission to HMRC.

Step 4: Assess the Potential Penalties

HMRC will assess the level of penalty based on several factors, such as how long the tax evasion has been going on and how much tax is owed. Voluntary disclosure can reduce penalties, but it’s still likely that HMRC will impose a financial sanction. The penalty can range from 0% to 100% of the tax due, depending on the severity of the case.

While the financial side of things is never easy, knowing exactly where you stand can help you plan your next steps. We’ll help you assess your options and, if necessary, negotiate with HMRC to ensure the penalty is fair and reasonable.

Step 5: Cooperate Fully with HMRC

Throughout the investigation, it’s important to stay transparent and cooperate with HMRC. They may request further information or documents during the investigation. At this stage, it’s essential that you continue to work with your tax investigation specialist to manage communications and ensure everything is handled properly.

This cooperation is vital to demonstrate your willingness to resolve the issue. A lack of transparency or failure to respond to requests can raise suspicion and complicate the investigation.

Step 6: Consider Settling Early

In many cases, if you’ve made a full disclosure and demonstrated a willingness to cooperate, you may be able to reach an early settlement with HMRC. Settling early can often result in a reduced penalty and a quicker resolution of the case.

However, this is a delicate process, and it’s best done with the support of a tax investigation specialist who can help you negotiate the terms of the settlement. We’ll ensure that the terms are clear, fair, and in your best interest.

Why You Need a Tax Investigation Specialist

A COP9 investigation is a serious matter that requires expert handling. A tax investigation specialist is essential to help you navigate the complexities of the process, ensuring that you take the right steps, make the appropriate disclosures, and negotiate with HMRC effectively.

Dealing with HMRC on your own can be daunting, especially in cases involving potential criminal charges. Having a tax expert on your side will not only relieve stress but will also give you the best chance of reaching a favourable outcome.

If you’re facing a COP9 tax investigation, it’s crucial to act quickly and strategically. Don’t try to manage it alone. With the right support from a tax investigation specialist, you can handle the situation with confidence, avoid the worst penalties, and protect your future. Get in touch today, and we’ll guide you through this challenging process, step by step.

HMRC Tax Investigation - What You Need To Know?

 HMRC Investigations team start Code Of Practice 9 investigations if they doubt a “serious” tax fraud has been executed by planned activity. COP9 is a civil investigative process used by HMRC where severe tax fraud is doubted whereas they don't want to carry out a criminal investigation. Taxpayers are allowed to make a full discourse beneath a contract named a (CDF) Contractual Disclosure Facility about exemption from illegal prosecution. 

HMRC strongly suggest that you seek to appoint independent proficient advice. Our team of Tax Investigation experts assist you on all matters covered by the COP9. It is crucial that once under revenue investigation Specialist Tax Attorneys are instructed as COP9s can be badly handled by non-specialist accountants.  Our team have wide-ranging knowledge in helping those facing a COP9 investigation whilst assisting to navigate the tough time limitations and strict rules. 

We can assist you by:

• Reviewing the whole matter; 
• Providing specialist guidance throughout the whole investigative process;
• Depicting you in correspondence, consultations and sessions with HMRC;
• Arranging the range of the Disclosure Report; 
• Collating and scheduling all documentation instructed by HMRC, including Outline Disclosure, Full Disclosure and the Disclosure Report; and
• Examining disputed tax assessments and penalties.
  
  

Just call us at 020-8239-4999 for further assistance.

What is a Code of Practice 9 (COP9) investigation?

HMRC will start a COP9 investigation if they have proof that you have or may have executed serious tax fraud. There are 2 options for a taxpayer under a COP9 investigation:

1. Accept the Contractual Disclosure Facility (CDF): in return for immunity from criminal prosecution, a taxpayer is allowed to make an outline disclosure to HMRC setting out all the areas where tax fraud has been carried about in planned manners at the outset. Penalties and interest apply. This offer expires after 60 days. The CDF can also be used when you expect to reveal a tax fraud willingly.
   
   
2. Reject the Contractual Disclosure Facility (CDF): if you do not think that you have carried a loss of tax via intentional manners you can replace a CDF Rejection Letter within 60 days. If HMRC carries on with the investigation and discovers that you have executed fraud, you will receive more increased fines and you could receive a jail verdict.
   
   

NB: the Denial path for taxpayers has been revoked: formerly, a taxpayer could refuse fraud, though would cooperate with HMRC during the investigation. Discarding the Rejection choice conveys if you are subject to a COP9, you have 2 options: accept the CDF or reject the CDF. 

What is serious tax fraud?

In the context of COP9 investigations, fraud is described as “unethical conduct that directed to, or was intended to lead to, the loss of tax”. An individual commits an offence if they are deliberately involved in the fraudulent evasion of tax or duty, by themselves or by another person. 

This includes:

    withholding or hiding relevant truths;

    dying to reveal a tax or burden penalty; or

    faking your tax matters.

It is unrelated to whether you have earned from “deliberate conduct”. Plotted behaviour is described as a taxpayer comprehending that an entry in a tax return was faulty, but they submitted it anyway. Tax fraud cannot be executed accidentally and the CDF is not fair to those desiring to reveal just sloppy mistakes or errors.

Code of Practice 9 contains taxation losses carried via Missing Trader Intra-Community (MTIC) fake and the loss of excise duties through your deliberate behaviour.

What is HMRC Contractual Disclosure Facility?

HMRC will mail an opening letter informing you of their suspicion of tax fraud. This letter will contain a copy of COP9 & the offer of a contract via the CDF. It is crucial to consult Specialist Tax Solicitors as soon as you obtain this communication from HMRC because it is important to respond within 60-as soon as the letter is received. If you don't reply at this time, HMRC will cancel their CDF offer.

What is the result of joining a CDF?

By concatenating the CDF you will confess that tax has stood withheld from HMRC due to your deliberate behaviour. As such, HMRC will be authorised to recover tax, penalties and interest that you bypassed from twenty years to the present.

A CDF signifies that you will be needed to co-operate with HMRC (with the help of Specialist Tax Lawyers), which assures the most amazing likely reductions on any penalties due.

What happens if the Contractual Disclosure Facility is rejected?

HMRC will start its investigations if you sign the CDF Rejection Letter. A Rejection Letter can be used in tribunal or Tax Tribunal proceedings, hence legal advice should be taken before communicating with HMRC.

It is important to consult a Tax Investigation Specialist because even if you plan to accept the CDF, if the Outline Disclosure is wrongly filled in then HMRC will not be bound to follow their side of the contract.