If you have received a COP9 investigation letter from HMRC, you need to speak to a tax solicitor straightaway. You have just 60 days to respond to HMRC. Before then, you need to decide whether to accept the allegations of tax fraud, or whether to deny them.
If you are an individual who has received a COP9 letter, or you are an accountant who has a client who has received an HMRC investigation letter, we strongly recommend talking to our tax solicitors before a final decision is made. Our tax lawyers are used to working closely with accountants, who have clients who may be involved in these types of investigations. A COP9 investigation is a serious matter, but with the right action, you can navigate the situation with the least amount of stress possible.
HMRC COP9 – What Are Your Options?
If you receive a COP9 investigation letter, it means HMRC suspects you have committed tax fraud. You can either accept the allegations or deny them. Each option comes with potentially serious consequences. Below, we explore each of them in turn.
- You Accept The Allegations
If you accept that you have committed tax fraud, HMRC offers you the chance to enter into the Contractual Disclosure Facility (CDF) process. This means that you confess everything, including how you behaved fraudulently, who else was involved and how you benefitted.
If you enter into the Contractual Disclosure Facility process, you must be entirely honest. You must provide HMRC with all the documents and information they ask for. Otherwise, you will be breaking the terms of the contract, putting you at risk of heavier penalties from HMRC.
In return for your co-operation, HMRC provides immunity from criminal prosecution. If you comply, you can be confident that criminal proceedings will not be brought against you. Nevertheless, you can expect to face a financial penalty. This can be significant, as HMRC can recover tax, interest and associated penalties that have been evaded for the past 20 years.
- You Deny The Allegations
Alternatively, you can deny the allegations. By doing so, you are effectively saying that you refuse to co-operate with HMRC. In the past, you could deny the allegations but work with HMRC to achieve a resolution. This is no longer possible.
However, you are able to provide documents to support your innocence, and provide an explanation of your actions. Once this information has been submitted, you must wait for HMRC to decide what to do. They may pursue civil proceedings against you, or if they believe the fraud is serious (or they wish to send a deterrent message), HMRC will initiate a criminal investigation.
If HMRC conducts a criminal investigation, their findings will be passed to the Crown Prosecution Service (CPS). The CPS decides whether to press charges. If so, the case will go to court. If you are convicted, you could be handed a prison sentence.
Therefore, the implications of denying the allegations of tax fraud are potentially very serious.
What Should You Do?
If you accept that you have acted fraudulently, then honesty is the best policy. However, we still recommend that you ask a legal representative to act on your behalf. This is because you must make various disclosures to HMRC. If you fail to meet their demands, you could be accused of breaching the terms of the contract, making you liable to a criminal investigation.
If you have not committed tax fraud, you might feel that you are in a lose-lose situation. You cannot co-operate with HMRC (even if you want to) but you are innocent of any wrongdoing. Your only option is to provide an explanation of your actions. Again, we advise asking a legal expert to draft this response for you. Your defence needs to be convincing, or HMRC will take further action against you.
Talk to a tax solicitor
Therefore if you receive a COP9 investigation letter from HMRC, the first thing you should do is to contact us at Altion Law. You only have 60 days to respond to HMRC, so please do not delay. We can discuss your options, advising you on the right approach. Whichever you choose, we can act as your legal support for the duration of the process.