HMRC Contractual Disclosure Facility
The Contractual Disclosure Facility. A Path to Avoid Prosecution.
Understanding the HMRC Contractual Disclosure Facility
HMRC uses the Contractual Disclosure Facility as part of a Code of Practice 9 investigation where it suspects that an individual, business or company has committed deliberate tax fraud resulting in a significant loss of tax.
The Contractual Disclosure Facility provides an opportunity to make a voluntary disclosure of any deliberate tax fraud that has occurred.
Provided the terms of the facility are complied with, HMRC will investigate the matter through the civil process rather than pursuing a criminal investigation.
The Fraud Investigation Service (FIS) at HMRC is responsible for conducting civil investigations in cases where they suspect fraud using the Code of Practice 9.
A COP9 letter will contain a:
- Contractual Disclosure Facility (CDF) offer,
- letter of acceptance,
- rejection letter,
- disclosure form, and
- copy of Code of Practice 9.
Receiving a Contractual Disclosure Facility should never be ignored. HMRC requires a response within the specified deadline and makes it clear that you must decide whether to accept the offer and admit deliberate tax fraud or reject it.
Both options can have significant legal and financial consequences. Regardless of which choice you make, it is crucial to seek expert legal advice before any decision is made.
Why choose us
At KANGS, we will advise you at every stage of the Contractual Disclosure Facility and Code of Practice 9 investigation. We carefully assess the evidence, explain the available options and develop the most appropriate strategy to protect your interests throughout the investigation.
If you or your company accepts the Contractual Disclosure Facility, we will prepare and manage the disclosure process, liaise directly with HMRC on your behalf and negotiate to achieve the most favourable outcome available in the circumstances.
If you decide to reject the offer, we will provide strategic advice and robust representation throughout the ensuing HMRC investigation.
We are here to help you
A Contractual Disclosure Facility investigation can be complex and daunting, but you do not have to face it alone. Our specialist HMRC tax investigation solicitors provide clear, practical advice from the outset, developing a strategy tailored to your individual circumstances and representing you throughout every stage of the Code of Practice 9 process.
Contact us for a confidential consultation, where our experienced HMRC tax investigation solicitors will offer you expert legal advice and guidance.
For further information regarding the Contractual Disclosure Facility, please see our Frequently Asked Questions.
Testimonials
HMRC Disclosure Facility FAQs
How can KANGS help?
It is imperative that you seek experienced legal guidance and representation if you receive a COP 9 letter.
As stated, irrespective of the time limits imposed and the technical information demanded, acceptance of a COP9 offer is an admission of criminal liability.
The Team at KANGS will carefully consider and advise whether the procedure is suitable for you, guide you through the alternatives and ensure that every procedural step is covered promptly and thoroughly.
Contact KANGS
The expert lawyers at KANGS are available to assist you. We can arrange initial consultations in person, by video call or telephone.
Please contact one of our experts listed below or contact us at:
How does HMRC define deliberate and dishonest behaviour?
Behaviour that goes beyond a mere accidental error and includes prosecutable offences such as:
- cheating the public revenue
- fraudulent evasion of tax or
- fraud.
Direct evidence of such behaviour can include:
- evidence from a third party
- an admission by the person
- observations by HMRC officers.
Where there is no direct evidence, HMRC will be required have to produce indirect evidence based upon reasonable inferences drawn from the available facts.
Examples of such behaviour include:
- financial gain from ‘off record sales’ used for personal benefit,
- deliberately excluding one or more transactions of a series of similar transactions,
- multiple inaccuracies that suggest the behaviour goes beyond careless,
- a significant inaccuracy that is extremely unlikely to have gone unnoticed.
It should never be the case that a taxpayer accidentally engages in ‘deliberate and dishonest misconduct.’
How long does the Contractual Disclosure Facility process take?
Following receipt of a Contract Disclosure Facility, the recipient has sixty days to comply with two disclosure stages, commencing with a valid ‘Outline Disclosure’ of the deliberate conduct resulting in a tax loss.
This Outline Disclosure is followed by a ‘Certified Statement’ which confirms that a full, complete and accurate disclosure of all other irregularities has been provided. This includes certified statements of assets, liabilities, all bank statements and credit cards, collectively known as ‘Formal Disclosure.’
The deadline can only be extended in exceptional circumstances.
Communications should be sent to HMRC by email, who will respond within seven days. HMRC will contact you during the sixty-day period unless you have responded to the Contract Disclosure Facility.
During the sixty-day period, HMRC is still entitled to:
- take action against goods you own or possess,
- start or continue debt collection,
- continue any other action needed as part of HMRC’s legal obligations.
HMRC may require the recipient to attend an Interview.
What if I refuse a Contractual Disclosure Facility?
A Contract Disclosure Facility can be refused by completing and returning the ‘CDF Rejection letter,’ which will have been supplied, or by ignoring HMRC’s correspondence.
Although withdrawal from the process, after acceptance of the Contract Disclosure Facility offer, will amount to a rejection, such action is likely to trigger the warning contained within HMRC Guidance:
‘HMRC may begin a criminal investigation into your tax affairs at any time. The letter you have signed can be used in court as evidence to show that you intended to deliberately mislead HMRC.’
What if I accept a Contractual Disclosure Facility, can I still be criminally liable?
Cooperation within a COP 9 constitutes an admission to deliberate and dishonest behaviour.
HMRC itself advises that before accepting or rejecting a COP 9 offer, legal advice/assistance should be sought.
The standard position is that those who accept a Contractual Disclosure Facility (CDF) and make honest and complete admissions during the CDF process will not be criminally prosecuted by HMRC in respect of the disclosure made.
Should HMRC still seek to pursue a criminal prosecution it is likely that such a prosecution will be prevented by the courts as an abuse of process (R v Abu Hamza).
In accepting a Contractual Disclosure Facility, you agree to:
- admit that your deliberate behaviour has brought about a loss of tax, duty or payment administered HMRC,
- tell HMRC about all the tax, duty and payment losses brought about by your deliberate behaviour,
- provide as much detail as you can within sixty days, as stated above,
- give additional details, in the form of an Outline Disclosure, referred to above,
- provide full cooperation,
- pay any tax, duty, interest and penalties that you owe.
However, should any failure to disclose all evidence, even if believed to HMRCs investigation, is discovered HMRC may still prosecute. The same will apply if any false statements are made and/or submitted.
It should also be noted that CDF relates only to investigations issued and conducted by HMRC. Acceptance of a CDF may only prevent criminal prosecutions being instigated by HMRC and does not alleviate criminal liable and the potential of criminal prosecution from any other law enforcement agency.
News & Insights
How HMRC Recovers Corporate Tax Debt through Personal Liability Notices
Get in touch
Send an enquiry
