‘I’ve received a COP9 in the post – What do I do?’

One of the biggest fears a business owner faces during a tax investigation is whether or not they are going to prison. It’s a question we hear almost daily: ‘If I’m being investigated, and HMRC think I’ve committed fraud or tax evasion, they are going to send me to prison, aren’t they?’

It’s an understandable concern. Even if you’ve simply made errors on your tax returns, hearing from HMRC can be incredibly stressful for you and your business. But with all that said, today we are going to put your mind at ease.

We’re going to break down what a COP9 is and what it really means for your business.

Understanding HMRC’s COP9 and their Contractual Disclosure Facility.

First off, if you’ve received news of a COP9 investigation, you may be wondering what you’re supposed to do first. The main thing, we’d argue, is ask for help. But also, don’t panic. Because ultimately?

If you know you’ve committed mistakes with your tax returns, receiving a COP9 is actually good news.

But to understand why, let’s first investigate COP9 itself – or to use it’s longform title, Code of Practice 9.

Basically speaking, COP9 is a form of investigation in which HMRC believes there to be deliberate misconduct when it comes to declaring your taxable earnings.

Whether you’ve been targeted due to suspicions from HMRC or a third-party, by invoking COP9, HMRC are giving you a choice: either disclose the loss of tax you have brought about, or face a criminal investigation and, if you are found at fault, prosecution and a prison sentence.

Scary stuff, right?

And you’re probably wondering how on earth receiving such news could be considered a good thing.

But the reason receiving a COP9 investigation can be seen in this light is that alongside the investigation, you are being given a way out.

So long as you comply within 60 days, you are being given life-line to avoid a potential prison sentence.

A life-line called a CDF, or the Contractual Disclosure Facility.

In simple terms, then?

If you are suspected of committing serious tax fraud and you receive notice of a COP9 investigation, so long as you comply and disclose the full truth about your returns, HMRC will not pursue a criminal investigation. Nor will they pursue prosecution or prison.

This means instead that you’ll pay back what you owe, usually with a fine. And nothing more.

Which is a hell of a lot more appealing than a prison sentence, isn’t it?

So how do you take advantage of the CDF?

To keep things simple, the CDF is a contract you make to HMRC – a response, if you will, to the allegations of tax fraud or evasion. It’s a signed statement, acknowledging your understanding of the issue, but also offering HMRC a reply of how you’d like to proceed.

And you’ve got three options when it comes to COP9 and the CDF. Really speaking, the first is by far the most helpful for you and your case. The other two options? Not so much. Still, if you’re unsure which to take?

Talk to us. We can help clear the air.

Your options when facing COP9.

1.  Disclosure – admitting any wrongdoing within 60 days; HMRC will then confirm that no criminal investigation will be commenced.

2. Denial – within 60 days, stating the you are denying the charges presented to you, but that you are willing to cooperate to settle the matter. This option may still lead to a criminal investigation if you are found at fault.

3. Non-Cooperation – if HMRC receives no response, a criminal investigation will most likely be launched.

So what can I take away from this if I’ve received a COP9 investigation notice?

Ultimately speaking, COP9 investigations are only issued when HMRC has serious concerns about suspicious tax activity.

Now, we understand that everyone’s human – everyone makes mistakes. So if you know that you’ve committed wrongful actions when it comes to your tax returns, it’s always best to speak up and ask for help.

When it comes to criminal investigations, HMRC would much rather see your compliance – not only will it help you avoid a prison sentence, it’ll save both you and HMRC the cost of a lengthy legal battle.

So at the end of the day? It pays to be upfront and honest.

If you’ve received a COP9 notice, you’ve got 60 days to get your affairs in order. 60 days to prepare your response. But whatever option you go for, be it an honest disclosure or even a co-operative response of denial, it’s best to get your affairs in order.

And if you’re still not sure what to do next?

Get in touch. We’ll give you peace of mind.

The Tax Haven

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