Receiving a letter under the Code of Practice 9

Any letter issued by H M Revenue & Customs (HMRC) under COP9, otherwise known as the Contractual Disclosure Facility (CDF), will come from the Fraud Investigation Service, a specialist division of HMRC.

What should you do if you receive such a letter?

Our top 10 tips

1. Take it seriously. You are being ‘accused’ of tax fraud so you should not take such a letter lightly.
2. Discuss the letter with a member of Crowe’s Tax Resolutions team who will discuss your tax affairs with you and decide how to best respond.
3. Do not waste time. On receipt you only have 60 days to accept or reject the offer of the CDF and submit an outline disclosure, if applicable.
4. Do not accept the offer of the CDF if you have not done anything deliberately wrong in relation to your tax affairs.
5. Accept the offer of the CDF if you have done something deliberately otherwise known as tax fraud or tax evasion. It will be your means of obtaining immunity from a criminal prosecution.
6. In considering whether to accept the offer or not, think laterally about all taxes including Income Tax, Capital Gains Tax, employment taxes (including subcontractor taxes), Corporation Tax and Inheritance tax.
7. If you have different tax issues to disclose, separate out the deliberate errors from careless or technical oversights before you and your advisor submit an outline disclosure.
8. Do not ‘cherry pick’ your disclosures; individuals who are prosecuted tend to be those who decide to disclose some issues but leave out other issues. A partial disclosure is always a bad idea.
9. Be aware that certain classes of individuals (accountants, solicitors, former HMRC employees, anyone involved in the administration of taxes, celebrities) may not qualify for immunity under the Board of HMRC’s prosecution policy, although the offer of COP9 once issued and accepted, if appropriate, will secure immunity from prosecution.
10. If you accept the offer of COP9, make a payment of account at the earliest opportunity; a payment to accompany the submission of the outline disclosure is generally a good idea. The figure does not need to be scientific but should be credible (i.e., if liabilities are thought to be in the region of £100,000 then an initial payment on account of £10,000 would seem reasonable ‘gesture’) and will be indicative of a willingness to cooperate.

Getting things right at this opening stage is just the start of a complex process, and expert advice will be needed at every turn to ensure that you emerge from the COP9 process with nothing worse than payment of the underpaid taxes, interest and a monetary penalty required.

For more information, or to discuss your position, please get in touch with Sean Wakeman or your another member of the Tax Resolutions team or your usual Crowe contact.