HMRC Investigations

Taxpayers who are being investigated by HMRC for suspected tax fraud now don’t have the option of co-operating with the investigation while denying wrongdoing under new guidance.

Denial was one of three options for taxpayers when HMRC decided to investigate for suspected fraud under a Code of Practice 9 (COP9) procedure.

Once this starts, taxpayers have 60 days to come clean about their tax “irregularities”, making it less likely that they will face criminal prosecution.

Penalties for tax fraud can be up to 200% of the tax lost.

Whilst the ‘denial route’ did not afford a taxpayer immunity from prosecution, it did enable a taxpayer who was genuinely confounded by the receipt of COP9 an opportunity to engage with HMRC – and, in many cases, to reach resolution short of an admission of fraud.

Anyone in a regulated profession and, increasingly, anyone looking to borrow significant sums of money for example, can be seriously impacted by having made an admission of fraud – which is what the CDF amounts to. Any taxpayer receiving a COP9 letter should now take urgent legal advice.

So the question is how you would deal with a COP9 investigation.

The advice might be to go down the formal path can be risky. You have to be prepared for the matter to end up at the tribunal – costs and preparation time are factors – along with the chance that you will not be successful. It will however demonstrate to HMRC that you are no longer prepared to accept their poor behaviour/attitude. Remember also that Fee Protection does not cover a COP9 investigation.