COP 9 and COP 8 Tax investigations and HMRC Tax Investigations

COP 9 and COP 8 Tax investigations and HMRC Tax Investigations

HMRC’s funding is ever increasing in order to tackle what they see as wide spread an persistent tax avoidance.  They have also advanced their technology in terms of software’s which are the ways they gather their information such as their own surveillance which integrates with department of work and pension , tax returns, land registry, banks etc.

Code of Practise 9

Code of Practise 9 is where HMRC suspect that tax fraud has occurred and they will be investigated under this. If the tax payer is accepted into this process then they will hae to admit they they deliberately evaded tax and an interview will be arranged with HMRC officers from the HMRC Fraud Investigation Service. In this interview the tax payer will be given a chance to correct tax matters via a submission of a disclosure report called the Contractual Disclosure Facillity. This report would have to be prepared by a tax investigation specialist which the taxpayer will then submit. In essence the tax adviser will be conducting the review and find all irregularities and report them to HMRC, this report will also calculate the tax, interest and penalties to offer HMRC in a settlement.

Once HMRC receive the report and the settlement offer with a formal declaration from the taxpayer, HMRC will examine the contents against their intelligence and they can reject the report and ask further questions if they believe the report to not be correct or incomplete. Given that the report is submitted on time and it is accepted by HMRC, the taxpayer is guaranteed toy not be prosecuted for any of the tax offences and irregularities admitted and disclosed in the disclosure report. This therefore gives the taxpayer a chance to not be prosecuted for tax evasion.

Code of Practise 8

When Code of Practise 9 is not appropriate (no discernible dishonesty) HMRCs Fraud Investigation Service may choose to investigate under Code of Practise 8. Unlike COP 9 if HMRC discover any evidence of dishonesty and fraud the tax payer doesn’t hahve the guarantee of non-prosecution. A COP 8 investigatioon can potentially convert into a criminal prosecution therefore its very important to seek help as soon as possible.

Criminal Prosecutions

In cases which the taxpayer has engaged in deliberate tax evasion its better to approach HMRC and seek disclosure under COP 9 as they would then have immunity rather than HMRC find the evidence and face prosecution under COP 8.

Voluntary Disclosure

If you decide that its best to approach HMRC before they investigate you it’s best to get in touch with a tax specialist who will correspond with HMRC all the way until your closure.

However if your tax irregularity isn’t qualifying under COP 9 its best to make the disclosure to HMRC through the Digital Disclosure Service. When you notify HMRC that you intend to make a disclosure you will have 90 days to submit the full disclosure.

Do you have a tax investigation that you require an experienced tax specialist for? Get in touch with Cheylesmore Chartered Accountants today by ringing 02476017778