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Anyone can be investigated by HMRC
Targeted tax campaigns are becoming more popular as the government combat tax avoidance and tax evasion.
In 2017, HMRC unveiled its new Connect System, a cutting-edge intelligence system designed to detect possible tax evasion. The new system is now in charge of selecting nine out of ten inquiries for further processing.
Whatever the enquiry may be, it makes sense to seek expert advice early. We can support you and manage any communication with them during the process.
HOW WE CAN HELP
Tax investigations and Code of Practice enquiries COP8 / COP9 can be highly stressful.
Our team has extensive experience in helping people to resolve matters on a civil basis, where tax fraud has been alleged by HMRC and COP9 issued.
With our hands-on approach, we guide and support persons we act for through what can be a difficult time for them. By managing the disclosure process and dealing with HMRC on their behalf, we prepare a disclosure report and negotiate settlement of the enquiry to help clients reach the end of the process with minimum disruption.
The need for highly experienced professional assistance where HMRC has alleged tax fraud cannot be overstated, given that criminal prosecution may follow if a materially false disclosure is found to have been made.
If you have been served with HMRC’s COP9 we can help.
WHO IS AT RISK
Small businesses
UK Small businesses represent 95% of all companies, and they employ some 14 million people. Even though HMRC reduced its compliance activity spend by £35m, the tax yield from SMEs increased by £200m to £5.6bn.
Mid-sized businesses
Mid-sized businesses produced £4bn in additional tax - up 14% in 2018/19. However, tax investigations into large businesses have become less profitable, so HMRC is focusing on investigating small and mid-sized businesses.
Large businesses
Large businesses generated an additional £.10bn compliance yield for HMRC. By spending an extra £25m on compliance work in 2018/19, HMRC recouped £1bn in additional tax - that is a return of £40 for every extra £1 spent on compliance.
Individuals
Individuals produced an additional tax yield of £2.4bn from taxpayers with less than £150,000 in annual income and under £1m in total assets.
Wealthy individuals
Wealthy individuals yielded £1.8bn from an estimated £145m spent on compliance activity. An 80% increase in tax generated for only an additional 7.5% spent by HMRC.
Contractual Disclosure Facility (COP9)
- The Contractual Disclosure Facility is used by HMRC to investigate suspected cases of tax fraud. All such enquiries are dealt with under Code of Practice 9 (http://www.hmrc.gov.uk/admittingfraud/cop9.pdf)
- The two bodies of offices within HMRC who carry out these investigations are the Special Investigations offices, who deal with cases where significant amounts of tax or serious issues are at stake, and the Civil Investigation of Fraud offices, who take responsibility for enquiries where smaller sums of tax are thought to be at stake.
- On issuing COP9, HMRC offers a ‘Contractual Disclosure Facility (“CDF”), whereby HMRC undertakes not to pursue a criminal investigation into any tax fraud disclosed, so long as you undertake to make full disclosure of tax irregularities, under the CDF.
- To gain the benefit of the HMRC undertaking not to pursue a criminal investigation, you must confirm to HMRC within sixty days of the issue of COP9, that you undertake to make a full disclosure under the CDF, and you must then fully comply with that undertaking.
- To comply with your undertaking, you need to complete the two disclosure stages:
provide a valid outline disclosure of the tax frauds (“outline disclosure”)
provide a certified statement that you have made a full, complete and accurate disclosure of all tax irregularities together with certified statements of your assets and liabilities, and of all bank accounts and credit cards you have operated (“formal disclosure”). - This is the only way that you can be certain that HMRC will not carry out a criminal investigation into the suspected tax fraud.
- Great care is needed in dealing with the CDF, whether dealt with by the Special Investigation or Civil Investigation of Fraud offices, to ensure that any disclosure made is full and complete, so that no criminal prosecution can take place.
- The seriousness of enquiries carried out under the COP9 Contractual Disclosure Facility procedure cannot be overstated, and it is worthy of note that HMRC’s COP9 includes the following advice.
- You are strongly advised to seek independent professional advice. If you already have an appointed adviser you should contact them immediately. However, many people find it helpful to appoint a specialist adviser who is familiar with this Code, in addition to their regular adviser.
Good businesses have great bookkeepers
Bookkeeping is essential to any small business, and rely on it to accurately track funds incoming and outgoing, manage cash flow, and prepare year-end tax returns. Each month, you must balance your books to avoid issues with stock, suppliers, and even taxes. Your bookkeeping efforts should produce a 'trial balance' that you simply hand over to us at the end of the year.
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