Contractual Disclosure and COP9
Any tax investigation or disclosure is sensitive and complex. Advice from our award-winning, specialist team will help your client navigate through the CDF process and achieve a positive outcome.
We know that every case is unique, sometimes requiring a robust stance to be taken with HMRC, sometimes needing a practical solution to be negotiated, at other times a discreet discussion. We take time to explain and clarify complex issues so that clients are kept fully informed throughout the CDF process. Our specialists ensure that the right amount of tax, if any, is paid in settlement of the case.
We have an excellent working relationship with HMRC’s Fraud Investigation Service and CDF teams and meet regularly to discuss how the facility is working in practice and associated issues.
We are represented on important committees, such as HMRC’s Fraud Forum, the Enquiries and Appeals Committee at the ICAEW, the Tax Investigations Practitioners Group, and the Chartered Institute of Taxation’s Management of Taxes Sub-committee.
To achieve the best outcomes for our clients, we work closely with other professionals, including accountants, lawyers, fiduciaries and bankers. We can work independently of existing advisors or in a peer capacity.
HMRC prefers to deal with cases of suspected tax fraud through the Contractual Disclosure Facility (CDF) in accordance with the procedures set out in the department’s Code of Practice 9 booklet.
Under the CDF, taxpayers suspected of tax fraud receive a letter from HMRC offering the opportunity to make a disclosure. Taxpayers have 60 days to agree to the facility’s terms and provide an outline disclosure or deny any tax fraud has been committed. If no response is received within the 60-day period, HMRC assumes that the taxpayer has decided not to admit fraud or to co-operate.
HMRC makes no secret of the fact that it is clamping down on tax fraud. The risk of HMRC discovering inadequacies is growing as its data-gathering techniques grow ever more sophisticated. This is evident from the increasing number of automatic exchange of information agreements between tax authorities, the use of the Connect analytical computer system, allowing HMRC to act swiftly in identifying and investigating fraudulent behaviour, and employment of extra investigators and risk and intelligence staff. HMRC is also assigning more resources to increase the pace and number of tax evasion cases being brought before the criminal courts.
Agreement to the CDF’s terms commits taxpayers to providing a full disclosure within a set period of time and completing a number of certificates. As part of that process, they may be invited to a meeting with HMRC. HMRC retains the option to conduct a criminal investigation in cases where co-operation breaks down or into matters not included in the disclosure.
Anyone with undeclared tax relating to offshore matters faces very serious risks. Under the Common Reporting Standard, more than 100 countries have signed up to automatically provide HMRC with details of overseas income and assets on an annual basis. On discovery, especially if a taxpayer denies involvement in any tax fraud, HMRC may immediately commence a criminal investigation (up to six months in prison) by virtue of a strict liability offence, as well as a final penalty and inclusion on HMRC’s published list of deliberate defaulters.