HMRC again undertakes investigations under COP9 where they suspect fraud.
It is a highly prescribed code of conduct setting out how HMRC will proceed with their investigation and the taxpayer’s rights.
Having established that they have a suspicion of fraud, HMRC will contact a taxpayer to offer the contractual disclosure facility, agreeing that if the taxpayer makes an outline disclosure of the fraud within 60 days, he or she will be given immunity from prosecution.
Should the taxpayer refuse the offer, HMRC reserves the right to commence its own investigation which may be a criminal investigation. Frustratingly for the taxpayer, HMRC will give no indication in its initial correspondence as to the nature of their suspicions.
The COP9 process can be very intrusive and long-running. Whether the taxpayer agrees to cooperate or not, HMRC will generally seek to meet with them their agent and will question them intensively about their personal and business interests.
If the taxpayer cooperates, HMRC will ask them to commission a report from their agent setting out the irregularities, both deliberate and otherwise, that have resulted in a loss of tax.
That report is a serious undertaking and it will be thoroughly tested by HMRC to ensure that they are satisfied that all areas of concern have been adequately addressed before they enter into a settlement agreement and conclude their investigation.
The taxpayer will also be asked to sign certificates detailing their bank accounts and credit cards and a certificate of full disclosure. The signing of these documents is a serious matter since if they have material errors or omissions HMRC may seek to a criminal prosecution.
If during the process the taxpayer makes materially false statements, they may nevertheless still be subject to criminal prosecution.
The offer of the contractual disclosure facility only covers those frauds that are admitted on the outline disclosure and therefore if there are further deliberate omissions that come to light, HMRC will again reserve the right to criminally investigate.
Our Knowledge Centre has further articles and information on the COP9 process, however please contact our team if you have any immediate concerns and need HMRC fraud investigation service advice.