We are sharing this update from ACCA, our professional body, for the interest of clients and contacts. The content is (c) ACCA
HMRC powers on the use of the code and the rules on how taxpayers can report fraud where they have failed to pay the correct tax
HMRC can investigate suspected cases of fraud using the Code of Practice 9 (COP9) civil investigation of fraud procedure when criminal investigations are not being considered.
Under COP9, taxpayers have the opportunity, in certain appropriate cases, to admit any tax fraud and correct their affairs. HMRC will not pursue a criminal investigation into the disclosure of the fraudulent behaviour, as long as the individual(s) concerned pay the tax, interest and penalties they owe.
HMRC will enter into a contract with the individual whereby the individual commits to make a complete, accurate, open and honest disclosure of all deliberate behaviour and all other irregularities in their tax affairs. In return HMRC commits not to open a criminal investigation. This is called the Contractual Disclosure Facility (CDF).
Where the individual enters a CDF contract with HMRC and then fails to make a complete, accurate, open and honest disclosure of the frauds bringing about a loss of tax, HMRC can still launch a criminal investigation with a view to prosecution.
HMRC has recently written to around 600 individuals in the UK following information leaked through the ‘Pandora Papers’, asking taxpayers to review their disclosure of offshore income and/or gains. One of the two possible ways of disclosing may well be the CDF under COP9. The other is the Worldwide Disclosure Facility (WDF).
In the latest agent update, HMRC had the following to say about the COP9 new code being published.
A new Code of Practice 9 (COP9) was published on 14 June 2023.
HMRC’s Fraud Investigation Service launched a new COP9 Code of Practice on 14 June 2023.
COP9 is where, in appropriate cases, taxpayers have the opportunity, to admit tax fraud, pay the tax they owe and significant penalties, and HMRC will not pursue a criminal investigation into the behaviour they disclose. The refreshed Code of Practice is part of a wider push to re-establish COP9 as HMRC’s primary civil investigation tool in tackling tax fraud. It has been developed in consultation with agents and other professionals.
The new Code of Practice:
- restates the Code of Practice, so that the COP9 recipient fully understands that the Contractual Disclosure Facility (CDF) is an opportunity offered to them as an alternative to a criminal investigation
- resets the terms of the CDF contract to make sure the recipient is clear on exactly what they are signing up to, HMRC’s expectations throughout the investigation, and the serious consequences of their non-compliance
- New sections have also been added to the Code of Practice. These:
- reinforce the criminal underpin in COP9 by emphasising the different circumstances when a COP9 case can escalate to a criminal investigation and ultimately to prosecution
- clarify when COP9 can cover fraud in respect of HMRC functions not involving tax
- set out what HMRC can do, if the COP9 recipient rescinds their admission of deliberate behaviour, after they have accepted the CDF offer.
If you have any questions about the revised COP9, email centre,[email protected].
You can read more about HMRC’s approach to tax fraud on GOV.UK.
Anyone with information about tax fraud should report it online or call our Fraud Hotline on 0800 788 887.