HMRC expands use of COP9 tax investigations

HMRC plans to ramp up the use of Code of Practice 9 - COP9 – powers and has clarified the rules on how taxpayers can report fraud where they have failed to pay the correct tax 

In cases where a criminal investigation is not commenced, HMRC can investigate suspected cases of fraud using the Code of Practice 9 (COP9) civil investigation of fraud procedure. 

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. 

Under COP9 the individual under investigation and HMRC will enter a contract 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 launch a criminal investigation with a view to prosecution. 

HMRC said: ‘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; and 
• 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. 
• In addition a number of new sections have been added to the Code of Practice. These include: 
• reinforcing 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; and 
• sets out what HMRC can do, if the COP9 recipient rescinds their admission of deliberate behaviour, after they have accepted the CDF offer. 

HMRC said anyone with additional questions about the revised COP9 should email the centre, cop9@hmrc.gov.uk 

Anyone with information about tax fraud should report it online https://www.gov.uk/report-tax-fraud or call the HMRC fraud hotline on 0800 788 887. 

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