CODE OF PRACTICE 9 INVESTIGATIONS
Contract Disclosure Facility
The Contract Disclosure Facility (CDF) signals the opening of a Code of Practice 9 investigation and is initiated by an invitation to make an Outline Disclosure of any irregularities in your tax affairs, including the tax affairs of any company, partnership, trust or other entity that you may have been involved with. You are given sixty days to make your Disclosures. You have the option to reject the CDF opportunity but, if you do so, H M Revenue & Custom (HMR&C) will begin their own investigation with a view to undertaking a criminal prosecution.
If you accept the CDF, the Disclosure that you make is called your Outline Disclosure. Specialist advice needs to be taken about the form and content of any Outline Disclosure as it will determine the course of the remainder of the investigation.
A Code of Practice 9 (COP 9) investigation is the most serious challenge that you can receive from HMR&C, other than a criminal prosecution.
They are conducted by well-trained Senior Officers who work at the Fraud Investigation Service (FIS) offices around the country and who investigate suspected serious fraud.
They need to be dealt with by experienced specialist firms, such as Cobham Murphy Limited, in order to ensure the best possible outcome.
COP 9 investigations are often cases which have been considered by HMR&C for criminal prosecution but where perhaps there was insufficient evidence, or maybe some other mitigating factors.
The COP 9 challenge is that you will not be prosecuted in respect of any offence that you Disclose in full to HMR&C but if you fail to disclose something, or only make a partial Disclosure, you will be considered again for prosecution.
COP 9 is offered providing the opportunity to make a Full Disclosure of any loss of tax resulting from deliberate or non-deliberate conduct. An assurance is given that a criminal investigation will not begin into any of the deliberate conducts disclosed if a Full Disclosure is made.
However, an investigation with a view to prosecution will be opened if false or misleading information is provided, for example deliberately under-stating the extent of the tax evaded.
Opening Procedure
The investigation usually begins with a written challenge from an FIS Investigator who will say that he/she has reason to believe that you have been involved in suspected serious tax fraud.
COP 9 investigations are dealt with under a protocol known as the Contract Disclosure Facility. This protocol gives you the opportunity to make a complete Disclosure of any irregularity in your tax affairs, with the assurance that if a complete Disclosure is made, you will not be criminally prosecuted in respect of those irregularities. However, the warning is given at the outset that a prosecution will ensue if the Disclosure is not complete, or if false or misleading information is provided to HMR&C during the investigation.
The parameters under which the CDF contract operates are strictly defined and must be adhered to throughout. The Investigators will demand to interview you and if you do not attend they will conclude that you have rejected their CDF offer and may subject you to a criminal enquiry, significantly higher civil financial penalties and the potential publication of your details.
Following the interview they will expect you to commission the preparation of a Formal Report which will identify all of the irregularities in your tax affairs and quantify the consequential unpaid taxes and other duties. As part of the Report, and subsequent to it, you will be expected to sign a series of Formal Statements about your bank and credit card accounts, about your assets and liabilities and to certify that you have made a complete Disclosure of all irregularities. All of those documents carry a warning that if they are not correct, you could be prosecuted.
Time Frame
The time frame for a CDF investigation can vary but, on average, it will be about three months after the initial challenge when the interview takes place and about six months after that the Report will have to be lodged with HMR&C. When the Investigators have interrogated the Report, they have an unlimited amount of time to conclude their enquires but it usually takes about a further six months. Some are slightly quicker but many go on for an extended period of time.
Overview
The CDF process is the highest level of civil investigation conducted in the UK and must always be taken very seriously. It is unlikely that a local accountancy firm will have the experience or expertise to satisfactorily defend a client’s position from the HMR&C attack and a specialist firm such as Cobham Murphy Limited should be instructed to ensure the best possible outcome.
