HMRC issue this Code of Practice in selected cases where we suspect tax fraud.

In many cases they carry out criminal investigation but in this they offer you chance to make a disclosure called a Contractual Disclosure Facility (CDF).

Time period - 60 days to respond.

Action - Full disclosure of deliberate conduct then no criminal investigation with a view to prosecution.

Relaxation - Co-operation will Reduce Penalty (if due), No sanction for insolvency or publication of Name and details.

Application - The COP9 applies to all tax losses brought about by your deliberate conduct.

 

1. The Investigation:

1.1. They can investigate their suspicions, with or without your co-operation: -

·       Own investigation.

·       Getting information from Stakeholders.

·       Formal action.

·       Securing assets.

·       By taking financial security.

1.2. Appointing an agent or adviser:

form 64-8, ‘Authorizing your agent’

form Comp1, ‘Compliance checks: temporary authorization to allow HMRC to deal with your tax adviser’.

Any costs that you incur for our enquiries cannot normally be claimed as an expense against tax.

 

2.The investigation: your options

1-Contractual Disclosure Facility (CDF)

2.What we have to do

a. Outline Disclosure of the deliberate conduct that brought about a loss of tax.

b. Certified statement that you have made a full, complete and accurate disclosure of all tax irregularities.

3.What HMRC will do-

- HMRC will not pursue a criminal investigation into the conduct you disclose.

4.Making a valid CDF arrangement

5.What is the effect of entering into a contract?

- HMRC able to seek recovery of past 20 years.

6.What happens after you enter a Contractual Disclosure Facility (CDF) arrangement?

a. Outline Disclosure- Section 4

b. Formal Disclosure- Section 5 & 6

7.Rejection route

- If you have brought about a loss of tax through your deliberate conduct you can sign and return the CDF Rejection Letter, within the same 60-day period.

 

3.Criminal investigation and COP9

In following cases Criminal investigation can be start by with a view of prosecution: -

3.1 Rejection

3.2 You send us an acceptance letter, but you don’t make an Outline Disclosure or make an invalid Outline Disclosure.

3.3 An apparently incomplete Outline Disclosure is made.

3.4 You make a false statement.

3.5 Any false Formal Disclosure documents are submitted.

 

4.Outline Disclosure

4.1 Description of your deliberate conduct-

description needs to set out sufficient information including, but not limited to:

• what you did

• how you did it

• the involvement of other people and entities

• how you benefited from the deliberate conduct

You must do this for each separate tax loss brought about by your deliberate conduct

4.2 Individuals and entities involved- Disclosing all the name of the companies, trusts, nominees, or partnerships involved.

4.3 Period of time during which the deliberate conduct took place- Disclosing in Outline disclosure the period during which a loss of tax was brought.

4.4 Other information-giving a description of what records were created, adapted, modified or destroyed to disguise what you were doing.

 

5.What happens after I make my Outline Disclosure?

5.1 If Outline Disclosure does not disclose everything that they suspect you might have been involved in then they may start a criminal investigation into deliberate conduct that you have not disclosed.

5.2 There will be 2 options for your Formal Disclosure: -

a. In more straightforward cases- Will agree the additional duties, Interest payable and penalty that is due and will be asked to make formal disclosure

b. In complex cases- More additional information will be required for which Disclosure report will be required. (Section 6)

 

6.The Disclosure Report

6.1 What will the Disclosure Report be expected to include?

Disclosure to include full details of your deliberate conduct like the brief history, Tax irregularities with quantification, summary of Due with HMRC, Certificate of Assets and Liabilities and of all Banks accounts and credit card.

6.2 How long will I have to prepare my report?

Depends on the complexity of the work needed, the amount that needs to be done and how easy it is to access the details needed

6.3 What happens whilst the report is being prepared?

We are responsible to attend the meetings if they ask for it. Providing relevant as an when asked for and discussing the report on vary treatment of issue as per them.

6.4 Calculating penalties

Penalties are chargeable in accordance with the provisions contained in legislation (in some cases up to 200% of the tax lost but subject to reduction for positive behaviour). More information can be founded om www.hmrc.gov.uk/compliance

6.5 Certificate of Full Disclosure

This document is one of the 4 mandatory requirements for the Formal Disclosure stage of the CDF. By signing you acknowledge that full and fair disclosure is made. False Disclosure will lead to criminal investigation.

6.6 Other certified documents- Templates for the statement of assets and liabilities, the certificate of bank accounts operated, and certificate of credit cards operated

6.7 Other errors (non-deliberate, etc)- Formal Disclosure should cover all irregularities in your tax affairs.

 

7.Interaction with HMRC

7.1 Meetings- After giving the reply within 60 days they may ask you to attend the meeting.

7.2 Your ongoing compliance obligations- need to meet all your ongoing tax compliance obligations during the COP9 process and continue to submit all your returns by the statutory filing dates.

7.3 Assurances on change of behaviour- They expect you to change your behaviour and comply with all your future tax obligations and not to revert to any deliberate conduct.

7.4 How to pay- Making a payment for tax will reduce the amount of interest due and change in payment capacity should be communicated.

7.5 Protective sanctions we may take- Any kind of irregularities in cooperation, paying liabilities etc will lead to actions like: -

• personal bankruptcy

• compulsory liquidation

• appointment of interim receivers or provisional liquidators

• getting civil freezing orders over your bank accounts

• getting legal caution over your property

7.6 Interaction with other HMRC interventions: - example, routine compliance checks and visits to VAT traders who have claimed repayments.

7.7 Publishing details of deliberate defaulters- They can publish name of a person who deliberately evades tax which can be prevented by cooperation.

7.8 Managing Serious Defaulters: - It’s an enhanced monitoring programme called Managing Serious Defaulters.

 

8.Terminology and definitions

8.1 Tax fraud: - In this document ‘fraud’ means the dishonest behaviour that led to or was intended to lead to the loss of tax.

8.2 Specialist tax areas and related benefits: - Code of Practice 9 includes tax losses brought about through Missing Trader Intra-Community (MTIC) fraud and the loss of excise duties through your deliberate conduct. Your conduct may impact on your tax credits claim, Child Benefit claims, and Student Loan repayments. But with Outline disclosure criminal investigation can be stopped in these matters.

 

9.Your rights

9.1 Your rights under HMRC’s charter-  www.gov.uk/hmrc/your-charter

9.2 Code of Practice 9 (COP9) and the Human Right Act (HRA):- The protection of the HRA will continue to apply to you, regardless of whether any investigation into your tax affairs under COP9 is a civil one or becomes a criminal one.

9.3 What if you are unhappy with our service: -Contact the person or office you deal with.

9.4 What if you think that we should end our investigation: -proper explanation will be needed and also certificate of Assets and liabilities, bank accounts, credit card etc

9.5 Customers with particular needs- range of services for people with disabilities, including guidance in Braille, audio and large print.

9.6 Privacy and confidentiality policy: - www.hmrc.gov.uk/about/privacy.html