HMRC Code Of Practice 9 (COP9) Investigations
Strategic Defence in COP9 HMRC Tax Fraud Investigations
Expert legal guidance in COP9 and Tax Fraud Investigations
HMRC can conduct both civil tax investigations and criminal investigations where it is suspected that tax has been evaded, under-declared or underpaid, or that a tax fraud has taken place.
Rather than immediately commencing a criminal investigation, HMRC may instead investigate the matter using its civil fraud procedures. The Contractual Disclosure Facility provides a formal framework for making disclosures. The investigation can involve a detailed examination of individual’s financial affairs, tax returns, business records, banking information and other relevant documentation, often spanning several years.
Informed legal advice and a strategic approach to the HMRC COP9 investigation can make a critical difference. Our tax solicitors focus on helping you understand your options and how to successfully resolve your COP9 matter.
Should I approach solicitors, accountants, or both?
If you are considering contacting an accountant or a solicitor regarding a COP9 or any tax fraud investigation, we would advise, initially, to instruct a firm of specialist solicitors.
Information provided to a solicitor is confidential and may be protected by ‘legal professional privilege.’ Accountants do not provide this protection, which is why we can act as a filter between you and HMRC, and manage communications on your behalf.
We work closely with tax accountants and regularly instruct them to advise on the quantum of any tax assessment served by HMRC.
The types of HMRC investigations we can help with:
- Initial assessment of tax liability
- COP8 Investigations
- COP9 and the Contractual Disclosure Facility
- Criminal Investigation and Prosecution
Why you can rely on us:
- Expertise in Tax Law: we are experienced tax solicitors specialising in both civil and criminal tax litigation, ensuring knowledgeable and comprehensive defence strategies.
- Proven Track Record: we have experience defending clients in complex tax disputes and COP9 investigations.
- Specialised COP9 Knowledge: our focussed experience in HMRC COP9 investigations, means we understand the nuances and intricacies involved, providing you with a tailored and effective defence.
- Strategic Negotiation: we have experience negotiating with HMRC to resolve matters and achieve favourable settlements or reduce penalties where possible.
- Confidential and Discreet: we understand the sensitivity of tax investigations, we ensure all matters are handled with utmost confidentiality and discretion.
For further information regarding Tax Fraud Investigations and COP9, please see our Frequently Asked Questions.
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HMRC COP9 Investigation FAQs
How can KANGS help?
Every HMRC investigation presents its own factual, financial and legal issues. KANGS is recognised nationally for its expertise in COP9 matters, tax disputes and tax investigations, with a proven track record of success.
Our solicitors regularly assist clients by:
- reviewing HMRC correspondence
- explaining investigation procedures clearly and concisely
- managing all communications with HMRC
- analysing financial documentation in detail
- working alongside accountants and other professional advisers where appropriate
- preparing comprehensive responses to HMRC enquiries
- protecting clients’ interests throughout the investigation
In addition, we:
- provide clear, strategic advice based on many years’ experience
- represent clients nationwide in meetings and interviews with HMRC
- represent clients in court proceedings and before the Tax Tribunal where required
- work closely with leading barristers, including King’s Counsel (KC), to ensure the highest standard of representation
Where matters involve wider allegations of fraud, money laundering or other criminal matters, our financial crime and criminal defence teams deliver fully integrated representation, ensuring a seamless and robust defence.
We are here to take the strain and worry of a tax investigation off your shoulders.
How do I approach a Tax Investigation?
Tax investigations are usually:
- Complex and technical in nature
- Requiring professional attention from a skilled team of solicitors, forensic accountants and barristers
- Protracted and lengthy often spanning a period of several years
KANGS has an experienced team of solicitors accustomed to dealing with serious tax investigations of all types.
Contact KANGS
The experienced tax lawyers at KANGS are available to assist you in HMRC COP9 investigations. We can arrange initial consultations in person, by video call or telephone.
Please contact one of our experts listed below or contact us at:
Why might HMRC open a COP9 investigation?
HMRC investigations are expensive and time consuming for both business owners and HMRC.
It is impossible to completely eliminate the likelihood of a tax investigation and you may become subject to an investigation even where there has been no wrongdoing as HMRC occasionally conducts random audits and investigations.
However, limiting the possibility of an investigation may be achieved by avoiding the following circumstances which frequently attract the attention of HMRC:
- a ‘tip-off’ to HMRC by a third-party,
- mistakes appearing on declared returns,
- noticeably large fluctuations in margins,
- conspicuous lack of profitability for long periods,
- inconsistent trading figures when compared with industry standards,
- omission of standard items such as PAYE.
What is Code Of Practice 9 and a Contractual Disclosure Facility?
Where tax fraud or tax evasion is suspected and a criminal investigation has not already been commenced, HMRC can initiate an investigation into an individual using the ‘Code of Practice 9 (COP9) investigation of fraud procedure’.
The subject of a COP9 investigation is afforded the opportunity to make complete and accurate disclosure of all deliberate and non-deliberate conduct that has led to irregularities in their tax affairs.
This is completed by way of a contractual arrangement called a Contractual Disclosure Facility (CDF).
However, HMRC may commence a criminal investigation if it considers that:
- A full and frank disclosure has not been made or
- False and/or misleading statements have been made
If HMRC concludes that full disclosure of all deliberate behaviour has been made, a criminal investigation will not be pursued and the COP9 procedure will be followed.
HMRC will not normally disclose any specific suspicions but will seek voluntary disclosure and it is crucial that specialist advice is taken in order to protect yourself against incrimination.
What are my options with a COP9 and what are the risks?
If you decide to reject a COP9 offer then you will not be bound by the terms of a CDF but you may be at risk of HMRC pursuing a criminal investigation against you.
If you accept the offer of a COP9, you will be required to accurately complete and return an Outline Disclosure Form (ODF).
If the ODF is not fully completed, HMRC will not be bound to comply with the CDF and may initiate a criminal investigation.
What are my obligations if I accept a COP9?
When the ODF is being completed, for each separate tax loss that arises as a result of any deliberate behaviour, you will need to explain:
- What you did
- How you did it
- The involvement of other people and entities
- How you benefited from the deliberate conduct
In some circumstances you may be asked to provide a Disclosure Report which will require:
- A brief business history
- A description of all tax irregularities (including any that were brought about by non-deliberate conduct)
- Quantification of all the irregularities
- Information to show how you quantified the irregularities
- Summaries of tax and/or duties, interest and penalties due
- A reconciliation of your irregularities figure with the summary of tax and/or duties
- A certified statement of worldwide assets and liabilities
- Certificates of bank accounts and credit cards you operated
- A certification confirming that the report is correct and complete
What is a COP8 (Code of Practice 8) Investigation?
HMRC will initiate a ‘COP8’ investigation if it considers that a large amounts of tax has been underpaid as a result of complex tax arrangements or tax avoidance schemes which have been implemented by a large number of taxpayers.
Although HMRC will often confirm at the outset of a COP8 investigation that there is no intention to prosecute the matter on a criminal basis, it is imperative to seek proper and experienced legal advice to avoid incriminating yourself.
What is the COP8 Procedure?
The investigation is normally conducted by the Fraud and Bespoke Avoidance section of the Special Directorate of HMRC, which, if there is suspicion of a serious tax loss to HMRC, will investigate the affairs of:
- Individuals
- Partnerships
- Companies
- Trusts
All available information will be closely examined including tax returns, accounts and bank statements.
During the course of the investigation you may be subjected to meetings with HMRC and/or visits from HMRC to your business premises to examine your business and private financial records.
How far back can HMRC investigate?
The period of time that may be considered depends on the circumstances of the investigation.
Where there is suspicion of an innocent error, the investigation period is four years.
In circumstances where mistakes/errors are considered careless or negligent, HMRC investigation period is six years.
In the event of suspicion of fraud and or tax evasion, an investigation period of twenty years is permitted.
However, at any stage of an investigation, HMRC may change its stance when the situation under review is more serious than originally anticipated, at which time the investigation period can be extended.
How long do HMRC tax investigations take?
The period will range from a few months to many years depending on the scope and difficulty of the investigation, the volume of information and documents to be collated and examined and whether any foreign Jurisdictions are involved.
Investigations are regularly time consuming, technical in nature, worrying in the event of important missing vital documents and contentious where it appears that HMRC Officers are crossing the boundaries of their statutory powers.
Having the support and guidance of an experienced legal team will be essential to tackle these issues and may result in an earlier resolution than may otherwise have been the case.
How does HMRC collect money owed?
Commonly used mechanisms by HMRC to recover tax money owed are issuing Tax Assessments, entering Payment Agreements and applying penalties and interest.
HMRC relies on various Statutes when conducting investigations, enforcing debt collection and punishing those defaulting in respect of tax liabilities including:
- Proceeds of Crime Act 2002
- Director’s Disqualification Act 1986
- VAT Act 1996
- Insolvency Act 1986
- Economic Crime Acts 2022 and 2023.
Possible outcomes of HMRC tax investigations, include pursuing:
- Penalties and interest
- Account Freezing Orders.
- Seizure of Goods
- Confiscation Orders
- Forfeiture Orders
- Director’s Disqualification
- Insolvency Proceedings
- Winding-up proceedings.
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