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Code of Practice 9 (COP9) is issued in cases where HMRC suspect tax fraud.  The process offers the individual concerned the opportunity to make a full disclosure of all irregularities under the Contractual Disclosure Facility (CDF) and avoiding prosecution under a criminal investigation.

Who needs to know this?

Individuals who have tax irregularities resulting from deliberate behaviour that have been offered the CDF by HMRC.  You can also apply to use the CDF for any voluntary disclosure of any deliberate omissions where this is appropriate.

Why is it important?

HMRC will often consider the COP9 option to conduct enquiries as it is more cost effective than a criminal investigation.

However, receipt of a COP9 letter from HMRC makes any subsequent disclosure “prompted” which increases the likely minimum percentage of penalty to be imposed from 20% to 35%.  There are therefore significant financial advantages in disclosing to HMRC on a voluntary basis before you are under investigation.

How can I enter the CDF?

An individual enters the Contractual Disclosure Facility in one of two ways. Either by way of an application made by a tax investigations specialist or by invitation from HMRC. Our partners at Markel Tax can manage the process in both scenarios.

Main advantages of entering the CDF

  • Immunity from prosecution in relation to the issues included in the outline disclosure, providing the taxpayer continues to cooperate.
  • If there is an ongoing tax enquiry, the taxpayer regains control.
  • There is a set format to be followed over a fixed time period, giving an indication of the date whereby matters should be resolved.
  • Through cooperation, the taxpayer can mitigate penalties imposed by HMRC.

Please contact James Cordiner, James.Cordiner@markel.com, tax investigation manager at Markel Tax, for a no obligation and confidential discussion if you have received a HMRC COP9 letter or would like to disclose tax fraud to HMRC.

Markel Tax is a trading name of Markel Consultancy Services Limited. Registered in England and Wales, company no: 08246256. Registered address:  20 Fenchurch Street, London, EC3M 3AZ. VAT no. 245 7363 49.

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