Other than criminal prosecutions, Code of Practice 9 (COP9) investigations are the most serious form of investigation available to HMRC. It is used where HMRC has strong reasons to suspect serious tax fraud and that this fraud has resulted in a substantial underdeclaration of tax.
COP9 investigations are conducted by experienced specialist HMRC fraud investigators, supported by teams of accountancy and computer forensic experts.
It is important to remember that a COP9 investigation is an extremely serious matter and should be approached accordingly.
A key part of the investigation is the preparation of a “Disclosure Report”. There is no specific format for this as it will depend on the individual facts and circumstances. However, a disclosure report will be expected to cover the whole of an individual’s business and private activities over a number of years and will usually require a detailed examination of financial accounts, bank statements and other financial records.
HMRC will usually expect a disclosure report to be submitted within six months. The disclosure report forms the basis for all discussions, meetings and negotiations under the investigation and it should therefore contain full disclosure of all activities and income, including all matters not previously declared to HMRC. An incomplete or unprofessional report will create significant problems during the investigation.
A COP9 investigation will not usually lead to a criminal fraud prosecution. However, if HMRC believe that materially false or misleading statements are given, they can decide to commence criminal proceedings. Additionally, the penalty regime for COP9 investigations is significantly more severe than other forms of enquiry, with the maximum penalty available being 200% of the tax due. The actual penalty levied will depend on a number of factors, most importantly the conduct of the individual throughout the investigation. It is therefore important to ensure that all aspects of the investigation are handled promptly, professionally and with full and complete disclosure.
We have experience of dealing with specialist investigations raised by HMRC. In many cases, we are appointed as a direct result of commencement of an investigation and this will be the first matter that we deal with.
If you require advice or would like to discuss how we might assist you in dealing with HMRC, please contact us.
Thanks for everything yesterday at the meeting with the Revenue, you did a fantastic job.