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  • Tax investigations under HMRC’s Fraud Investigation Service

    HMRC’s Fraud Investigation Service, formerly Specialist Investigations, undertakes investigations under Code of Practice 8 (COP8) and Code of Practice 9 (COP9). These are serious, invasive and time-consuming investigations that can have serious consequences if mishandled, including escalation to criminal investigation and prosecution.

    HMRC fraud investigation advice

    ETC Tax are experienced with dealing with the more technical matters investigated under COP8, as well as the allegations of fraud under COP9 which will usually cover undeclared income from private individuals or business. We will liaise with HMRC throughout to bring matters to a conclusion as swiftly and with the least possible disruption to your life. In some cases it can be proven that the allegation of fraud was unfounded and HMRC can be persuaded to close an investigation with no tax due, or an acceptance that errors made were not deliberate or fraudulent in nature.

    Should you receive a letter from HMRC under COP8 or COP9, it is essential to receive the correct advice at the outset by contacting our investigations team at ETC, Chris Watts and Thomas Spliancewski

    Code of Practice 8 (COP8) 

    The Fraud Investigation Service works under COP8 where they believe large amounts of tax have been underpaid because of complex tax arrangements or tax avoidance schemes that have been implemented by a large number of taxpayers.

    These investigations involve an allegation of deliberate or fraudulent at the outset; however, investigations under COP8 do not carry an immunity to prosecution from a criminal investigation where evidence of fraud is confirmed during the investigation.  However in the majority of cases where there is cooperation and disclosure from the taxpayer, HMRC do not prosecute.

    Unlike COP9, there is no standard format to a COP8 investigation. However, typical areas of focus for the Fraud Investigation Service undertaking investigations under COP8 include large transactional matters often with overseas connections, complex trust arrangements and tax avoidance schemes not under enquiry or settlement elsewhere.

    Both COP8 and COP9 cases may involve extensive approaches to third parties including banks, suppliers, customers, and so on to obtain information, and can therefore be extremely damaging.

    Code of Practice 9 (COP9)

    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.

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    Please provide as much detail as possible in regards to the reason for your enquiry so our tax advisers can prepare and tailor their response to reflect your needs. We will endeavour to - respond / call you back - to discuss your enquiry and you will not be charged for this time.

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