Code of Practice 9 investigations

Code of Practice 9 is issued as part of the Contractual Disclosure Facility (“CDF”). The CDF and Code of Practice 9 are generally only issued where HMRC suspect serious tax evasion with a minimum of £75,000 of tax at risk. The most serious cases are dealt with by HMRC Specialist Investigations usually for suspected tax fraud of over £500,000. The CDF and Code of Practice 9 cover all direct taxes (income tax, corporation tax and capital gains tax), as well as VAT and National Insurance. The CDF and Code of Practice 9 are the most serious civil tax investigations, being one step down from a criminal investigation. HMRC will guarantee that, if the taxpayer makes a full and accurate disclosure of all tax liabilities, there will be no prosecution. It is therefore vitally important that the forms relating to the CDF are completed correctly as failure to do so may lead to a criminal investigation by HMRC.

Taxpayers who are notified by HMRC of a Code of Practice 9 tax investigation have 60 days to either accept or decline the offer to take part in the CDF. As part of this process, taxpayers must make an “Outline Disclosure” which is not expected to contain precise details if these cannot reasonably be given within the sixty days but, as stated by HMRC:

“Needs to be an honest description of the tax fraud you are disclosing, made in good faith and to the best of your recollection with the help of any documents.”

The Outline Disclosure must cover each separate tax fraud committed at any time. Once submitted, HMRC will ask detailed questions with a view to checking its accuracy and a detailed report may need to be prepared by the taxpayer’s advisers giving a full and complete description of any tax irregularities. The process is concluded when the taxpayer makes a “Formal Disclosure” to HMRC, which is a certified statement that he or she has made a full, complete and accurate disclosure of all tax irregularities together with certified statements of  assets and liabilities, and of all bank accounts and credit cards operated.

Taxpayers faced with COP 9 tax investigations need urgent and skilled protection. There is no substitute for experience when dealing with HMRC and Levy & Levy have enormous experience in this area. Code of Practice 9 investigations are immensely stressful for clients and we never forget that our job is as much about helping you through this difficult time as it is about dealing with the tax issues involved.