Code of Practice 9 (COP9): What Is It & How to Respond?

If you’ve received a Code of Practice 9 form from HMRC, don’t panic. In today’s article we’ll tell you everything you need to know.

HMRC will send you a Code of Practice 9 form when they suspect you have committed fraud. As such, it's essential to take it seriously. If you are at all unsure, we recommend you get advice from a qualified tax expert.

In a previous article, we explained how to handle a Code of Practice 8 which HMRC sends when they think there might have been an underpayment of tax.

If HMRC discovers problems during the COP8 process, they'll often follow up with the more serious COP9. The consequences can be severe:

The Commissioners of HMRC reserve complete discretion to pursue a criminal investigation with a view to prosecution. In the course of the COP9 investigation, if the recipient makes materially false or misleading statements, or provides materially false documents, the Commissioners reserve the right to start a criminal investigation into that conduct as a separate criminal offence.

What Are My Options

A COP9 form gives you the chance to "disclose any loss of tax that has been brought about by your deliberate conduct". You have broadly two options when you receive a COP9 form:

• Co-operate by signing a Contractual Disclosure Facility (CDF)
• Reject the CDF offer

If you co-operate within 60 days (assuming you are truthful throughout the process) HMRC promises not to bring a criminal investigation against you. You are, of course, liable for up to 20 years' worth of:

• The tax you have evaded
• Interest
• Penalties

You can also formally reject the CDF by signing and returning the official rejection letter. If you genuinely believe you've done nothing wrong, you should consider this option. But be aware:

• HMRC will start an investigation which can be criminal in nature
• The rejection letter can be used in court against you
• If you are eventually found guilty, your details (including your name) may be made public

It's worth noting that you will be deemed to have rejected the CDF automatically if:

• You miss the 60-day window
• You sign the acceptance letter but fail to make a formal "outline disclosure"

Do I Need Professional Help?

In theory, you can represent yourself during a COP9 investigation. However, HMRC makes it clear that it's preferable to seek professional help and representation:

You are personally responsible for your tax affairs and the accuracy of the information supplied to us... (but) you are strongly advised to seek independent professional advice.

One of the ways your adviser will be able to help you, is in deciding if you should co-operate with HMRC at all. As we've explained, making a full disclosure under the terms of a CDF ensures you won't face a criminal prosecution. But your adviser may suggest a better way to proceed.

If you want your adviser to deal directly with HMRC on your behalf, you'll need to complete the necessary paperwork, either:

• Form 64-8 "Authorising your agent"
• Form Comp1 "Compliance checks: temporary authorisation"
• Fill out the agent details box on the Online Disclosure Form

Making The Disclosure

If you decide to complete an outline disclosure, make sure you discuss with your adviser the best way to proceed. The requirements are quite complex. For each "tax loss" you have to explain:

• What you did
• How you did it
• Who else was involved
• How you benefited

You'll need to have plenty of current and historical information on hand:

• Unique Taxpayer References (for individuals)
• VAT numbers (for companies)
• Dates
• Bank and credit card details

If you don't disclose something, and then it comes to light later in the investigation, you will face much harsher penalties.

If you’ve received a COP9, please get in touch. It's essential to determine the best course of action as soon as possible, and one of our experts will be able to start helping you straight away.