COP9 investigation process
What is COP9?
Code of Practice 9 (“COP9”) is a document that is issued by HMRC. It is part of its Contractual Disclosure Facility or CDF.
COP9 is issued only by HMRC’s Fraud Investigation Service or FIS.
It should be noted that one may only use the CDF Facility where HMRC suspects serious tax evasion has taken place. This means that COP9 may only be used in the same scenario.
The COP9 letter will set out HMRC’s investigative process into the serious tax evasion that it believes has taken place.
COP9 investigation process – general
The handling of a HMRC’s investigation is important in all cases.
However, where the investigation takes place under Code of Practice 9 then the handling of the process is even more paramount.
If the investigations are dealt with poorly an individual – the sanctions imposed by HMRC in terms of penalties can be significant.
In addition, HMRC could utilise their power to name and shame serious tax defaulters.
It is usual for a report in to the tax irregularities to be prepared by the taxpayer’s adviser. This report is submitted to HMRC.
HMRC will review this report. If they are happy with the report’s contents then the enquiry will end.
However, that will not usually be the end of it. Generally speaking, the taxpayer will then enter HMRC’s Serious Defaulters Programme for a period of time.
As stated, one of the outcomes may be that the taxpayer denies any deliberate tax irregularities.
It is likely that HMRC will conduct their own investigation into relevant issues. It should be noted that HMRC will only have issued COP9 where they have information that lead them to believe serious tax evasion has taken place. As such, they will not disappear without trace.
Proper professional representation is recommended to ensure that HMRC act within their powers in seeking further information about the tax-payer’s affairs.
Summary – COP9 investigation process
As stated above, Code of Practice 9 sets out the rules of engagement where HMRC suspects a taxpayer has committed serious tax evasion.
A COP9 investigation is a very serious matter and therefore one should not bury one’s head in the sand.
We recommend seeking proper professional advice if such a COP9 letter lands on your, or one of your client’s, door mats.
If you or your client have received a COP9 letter from HMRC, or have any queries about COP9 at all, then please do get in touch.