HMRC plans to ramp up the use of Code of Practice 9 - COP9 – powers and has clarified the rules on how taxpayers can report fraud where they have failed to pay the correct tax
In cases where a criminal investigation is not commenced, HMRC can investigate suspected cases of fraud using the Code of Practice 9 (COP9) civil investigation of fraud procedure.
COP9 is where, in appropriate cases, taxpayers have the opportunity, to admit tax fraud, pay the tax they owe and significant penalties, and HMRC will not pursue a criminal investigation into the behaviour they disclose.
Under COP9 the individual under investigation and HMRC will enter a contract whereby the individual commits to make a complete, accurate, open and honest disclosure of all deliberate behaviour and all other irregularities in their tax affairs. In return HMRC commits not to open a criminal investigation. This is called the Contractual Disclosure Facility (CDF).
Where the individual enters a CDF contract with HMRC and then fails to make a complete, accurate, open and honest disclosure of the frauds bringing about a loss of tax, HMRC can launch a criminal investigation with a view to prosecution.