Code of Practice 9 – video commentary

Matthew Watkins, Senior Manager in the Tax Investigations & Disputes team discusses HMRC's Code of Practice 9 (COP9), including the benefits of making a voluntary disclosure and Moore Stephens' approach.

Video transcript
Code of Practice 9, commonly referred to as COP9, is used in cases where there has been, or suspected of being, serious tax fraud. The process has been around for a long time, but since 2012 taxpayers are invited to make a COP9 disclosure under the Contractual Disclosure Facility (CDF).

The main advantages of COP9 are that provided the taxpayer makes a full disclosure of their fraud, the case will be settled on a civil basis and they won’t be subject to a criminal prosecution.

There are two ways of entering into the CDF, either HMRC invite you to make a disclosure under COP9 or you can voluntarily ask to be put into the process. In terms of voluntary registrations, we advise many clients to enter into the CDF if there is any real concern that HMRC may otherwise seek to criminally prosecute. For example, this could be where the amount of tax evaded is high or deliberate steps have been taken to escape paying the correct amount of tax, such as using undisclosed bank accounts or diverting profits out of a business.

To be accepted into the process the taxpayer must accept that a loss of tax is due to deliberate behaviour and that they will make a full and complete disclosure.

So how does COP9 work?
After the CDF registration has been confirmed, HMRC will write to the taxpayer and invite them to make an outline disclosure. This document will include a brief background of the tax fraud and how it was committed, the relevant period of time, the amounts involved and will also address any non-deliberate errors which need to be corrected. The outline disclosure document must be completed and submitted to HMRC within 60 days.

After HMRC confirm that a valid outline disclosure has been made they will normally ask for a meeting with the advisor and the taxpayer. The purpose of this meeting is to allow HMRC an opportunity to ask any further questions and agree with the advisor the scope of the disclosure.

The advisor will then normally agree to prepare a report and calculate the amount of tax due. In most cases it will take six months from the opening meeting to the report being submitted, but this can vary depending on the complexity of the case.

Once the report has been submitted and HMRC has accepted the disclosure, the final stage will be a closing meeting where penalties are discussed and negotiated.

Throughout the process, HMRC will expect the taxpayer to take steps to make payments of the final liability as soon as possible. If a time to pay arrangement is required, usually in cases where the funds to pay HMRC are not immediately available, then this can be agreed in a contract settlement.

Moore Stephens is one of the leading accountancy firms in the UK dealing with CDF cases and is ideally placed to offer expert advice and experience to taxpayers who require the safeguards which COP9 offers. Please get in touch if you require further support and guidance.

Otherwise, if you have concerns that you need to correct your tax affairs, then you’re strongly urged to do so before 30 September 2018. A disclosure opportunity called the Worldwide Disclosure Facility is currently available, and our team of experienced experts can help you bring your tax affairs up to date on the best available terms. For more information, please do contact Moore Stephens' Tax Investigations & Disputes team.

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