Received a COP9 letter from HMRC?
Our team of specialist tax advisers helps clients navigate COP9 investigations and avoid criminal prosecution.
What is a COP9 investigation?
Code of Practice 9 (“COP9”) is a process HMRC can use to investigate cases of tax fraud. Under COP9, HMRC and the individual enter into a contract committing the individual to a full disclosure of all irregularities in exchange for HMRC’s commitment not to open a criminal investigation – this is referred to as the Contractual Disclosure Facility (“CDF”).
In order to enter the COP9 process, the individual must admit that there has been a deliberate underpayment of tax.
What to do if you've received a COP9 letter?
Receiving a COP9 letter can feel overwhelming, but the most important thing is to respond carefully, understand your options and make informed decisions before engaging with HMRC. The steps below outline what you should do next.
1. Don’t ignore it
You need to consider your tax affairs for a period of up to 20 years and have only 60 days to respond to the initial letter, so it is important to act quickly.
2. Seek immediate professional help
A professional tax dispute resolution adviser can help you understand why HMRC issued the COP9 letter and whether you should accept the CDF offer. They will also help identify any tax irregularities and present them to HMRC in the correct format.
3. Meet the 60-day deadline to accept or reject the offer
You must respond within 60 days to accept or reject HMRC’s COP9 offer. If you accept, you must also submit an Outline Disclosure summarising all tax irregularities — failure to respond is treated as a rejection.
A COP9 investigation looks at all your tax affairs, for a period of up to 20 years. It therefore can take a prolonged, and often unpredictable, period of time. However, the process can be completed efficiently with expert, proactive support and co-operation from you.
You should only choose to reject the offer of the CDF if you genuinely believe that you have not brought about a loss of tax through your deliberate behaviour.
If you reject the offer and do not provide information to allay HMRC’s suspicions of tax fraud, HMRC may start its own investigation, which could be civil or may be criminal.
If you do not respond to HMRC within 60 days, HMRC will treat this as a rejection of the offer.
How RSM can support your COP9 process
Our specialist Tax Dispute Resolution Services team is made up of fully trained ex-HMRC inspectors, Chartered Tax Advisers and Chartered Accountants. Collectively, the team has several decades' experience of dealing with COP9 disclosures and other HMRC disputes.
Our team is well placed to help you achieve the best possible financial outcome, avoid a criminal investigation and reduce the stress that a COP9 process can cause.
The COP9 process explained
The COP9 process is structured, formal and often lengthy. It is designed to allow individuals to make a complete disclosure of all tax irregularities in return for a guarantee that HMRC will not pursue a criminal investigation for those that are deliberate, provided the disclosure is full and accurate. Each stage of the process has specific requirements and deadlines, and it is important to understand what is expected before engaging with HMRC.
Below, we outline the six key steps of the COP9 process and what they typically involve.
If you receive a COP9 letter from HMRC, it is because you are suspected of committing tax fraud. The letter will include an offer to enter into the Contractual Disclosure Facility Process.
You should seek professional advice without delay.
You have 60-days to consider HMRC’s offer, review your tax affairs and respond.
You can only accept HMRC’s offer if you accept that there is a loss of tax due to your deliberate actions.
By accepting HMRC’s offer, you are entering into a contract with HMRC and committing to make a complete disclosure. In return, HMRC commits not to open a criminal investigation.
If you do not respond within 60 days, HMRC will assume that you have rejected the offer and may start a civil or criminal investigation into your tax affairs.
You can reject HMRC’s offer if you do not believe that there is a loss of tax due to your deliberate actions. If this is the case, you should work with HMRC to understand why it suspects you have committed tax fraud.
If you accept HMRC’s offer, you should return the Acceptance Letter along with an Outline Disclosure.
The Outline Disclosure should provide a summary of all tax irregularities, whether they were as a result of deliberate actions or not.
It is not expected to be comprehensive, but it should be prepared to the best of your recollection and based on the information readily available.
The Outline Disclosure should explain what you did, how you did it, who was involved, and any benefit gained.
HMRC may also request a payment on account of the tax previously underpaid upon submission of the Outline Disclosure.
This all needs to be done within 60 days.
Following submission of your Outline Disclosure, HMRC may invite you and your adviser to a meeting.
HMRC considers attendance at meetings not only a strong indicator of your engagement with the process, but also a fulfilment of your contractual requirement to co-operate with the process. This is a very important stage of the process and should be carefully managed.
Most cases also require a Disclosure Report to provide sufficient information to secure HMRC’s agreement to the tax, interest and penalties payable.
HMRC will agree a timeline with you for submission of the report, which will depend on a number of factors such as the extent of the tax irregularities, the availability of documentation and the amount of work required to calculate the tax payable.
It is recommended that you commission a specialist adviser to prepare this report on your behalf; but you remain responsible for the accuracy of it and its submission to HMRC within the agreed timeline.
Formal Disclosure
When finalising the Formal Disclosure, whether with or without a Disclosure Report, there are various documents which need to be signed and submitted to HMRC.
The submission of these documents will signify compliance with the terms of your contract with HMRC.
Following submission of the Formal Disclosure, HMRC will review your documents and Disclosure Report. HMRC may issue follow-up questions, which ultimately will lead to a formal settlement of the investigation, including the agreed additional tax, interest and penalty.
If you cannot provide full payment on submission of the disclosure, you will need to agree payment terms with HMRC.
Speak with one of our COP9 specialists
You only have 60 days to review your tax affairs and respond to a COP9 letter. Speak to our experts today for a free, confidential consultation on 020 3839 3000 or submit your enquiry on the form below.
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Once you submit the form, a member of our team will contact you within 24 hours to discuss next steps.