HMRC have implemented a new facility to investigate suspected cases of tax fraud. They are sending letters to those they suspect have committed a tax fraud along with a copy of the HMRC Code of Practice 9 (COP9).
The letter will state that HMRC suspect that an individual has committed a tax fraud and will offer a contract through the Contractual Disclosure Facility (CDF) whereby HMRC undertakes not to pursue a criminal investigation into any tax fraud disclosed, so long as the individual undertakes to make a full disclosure of tax irregularities, under the CDF.
The letter will give the opportunity, through agreeing to the CDF, to accept bringing about a loss of tax through deliberate conduct. It will also allow the opportunity to deny the allegations and reject the CDF.
A CDF is only suitable for people who admit to tax fraud. It is not available for people who wish to inform HMRC about errors or avoidance schemes where a fraud has not been committed.
The two bodies of offices within HMRC which carry out relevant investigations are the Special Investigations offices, who deal with cases where significant amounts of tax or serious issues are at stake, and the Civil Investigation of Fraud offices, who take responsibility for enquiries where smaller sums of tax are thought to be involved.
A person issued with one of the new HMRC letters will be given 60 days to decide if they want to accept HMRC’s offer of a CDF. To secure a non-criminal outcome the individual must confirm within that period of time that they will make a full disclosure under the CDF, and then fully comply with the undertaking to do so.
If the offer is not accepted within the 60 days, HMRC will consider this to be non-cooperation and begin either a criminal or civil investigation into the suspected tax fraud.
As part of the CDF an individual will have to:
- Admit that deliberate conduct has brought about a loss of tax;
- Disclose to HMRC all relevant tax losses that the deliberate conduct has brought about, providing as much detail as is possible within 60 days of being offered the contract (“outline disclosure”); and
- Provide additional details after the 60 day period, including a statement confirming that accurate and complete details about the deliberate conduct has been provided to HMRC (“formal disclosure”).
Entering into a CDF is the only way to ensure that HMRC will not carry out a criminal investigation into the suspected tax fraud.
It is essential that great care is taken when dealing with the CDF. Any disclosure must be full and complete regardless as to whether the matter is being dealt with by the Special Investigation office of Civil Investigation of Fraud office. Failure to do so may result in a criminal prosecution.
The seriousness of enquiries carried out under the COP9 CDF procedure cannot be overstated. HMRC itself strongly advises that you seek independent professional advice.
Our Fraud Investigation Solicitors have over 30 years experience and are acknowledged independently as leaders in the field. We can assist if:
- You have been contacted by HMRC in relation to a suspected tax fraud;
- You are currently under investigation by HMRC or an other agency in relation to a suspected tax fraud;
- Have been charged with an offence concerning an alleged tax fraud; or
- You wish to contact HMRC to provide them with information about a tax fraud.
Slater and Gordon offer a free initial consultation for business crime and regulatory issues and can assist businesses 24 hours a day 7 days a week. Please call freephone 0800 916 9054 or contact us online and we'll be happy to help.
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