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Who needs to know this?

Individuals who have tax irregularities resulting from deliberate behaviour can apply for HM Revenue & Customs’ Contractual Disclosure Facility (CDF) to benefit from the immunity from prosecution that HMRC’s Code of Practice 9 can offer.

Why is it important?

Those who have committed tax fraud and have not yet sought specialist advice have the following two options available to them:

  1. They can appoint a tax dispute resolution expert and apply to HMRC for COP9 treatment.
  2. They can do nothing and;
  • hope that if (or when) HMRC make contact, HMRC decide to investigate under COP9 rather than conduct a criminal investigation; or
  • They are investigated criminally, which could even begin with a HMRC raid.

HMRC will often consider the COP9 option to conduct enquiries as it is cheaper than a criminal investigation. However, receipt of a COP9 letter from HMRC makes any subsequent disclosure “prompted” which automatically increases the minimum percentage penalty position from 20% to 35% so there could be a significant financial advantage in disclosing to HMRC before you are under investigation.

How can I enter the CDF?

An individual enters the Contractual Disclosure Facility in one of two ways. Via an application, usually made by a tax investigations specialist or by invitation from HMRC. We 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 the taxpayer an indication of by what date matters should be resolved.

Through cooperation, the taxpayer can mitigate penalties imposed by HMRC.

Please contact Sarah Scala, Associate Partner, and Head of Tax Dispute Resolution, for a no obligation and confidential discussion if you have received a HMRC COP9 letter or would like to disclose tax fraud to HMRC.

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