Code of Practice 9 investigations
If you have been contacted by HMRC’s Fraud Investigations Service or FIS, it is likely that you are suspected of serious tax avoidance or evasion.
The investigation will be under the following Codes of Practice (COP):
- Code of Practice 8, which relates to bespoke tax avoidance schemes where investigation for tax fraud is not seen as necessary or appropriate
- Code of Practice 9, where tax fraud or dishonesty is suspected and (usually) a large amount of tax is at stake
The investigation could relate to income tax, capital gains tax, VAT, SDLT, inheritance tax or one or more of these, plus any of the other taxes administered by HMRC.
Either way, if HMRC suspect that you have committed tax fraud, you should not think that they can be fobbed off or avoided.
Even if you believe that HMRC are mistaken in their suspicion, and there is a simple or an honest explanation, it is essential that you deal with the investigation seriously and engage with HMRC even if only to deny any wrongdoing.
Ideally, you should appoint an experienced lawyer to represent you with HMRC. This will ensure that you have someone to act as a buffer between you and HMRC throughout what can be a very worrying and anxiety-inducing experience. It will also ensure that you maximise your chances of resolving the investigation without serious consequences for you – such as prosecution, penalties for deliberate behaviour and publication of your name as a tax defaulter.
Appointing a direct access barrister from the beginning, instead of a solicitor, a non-legally qualified tax accountant or an ex-HMRC investigator can save you paying out fees for two or even three sets of professional advisers.
If matters proceed to an interview under caution, or you are arrested or criminal proceedings are begun, you will then need to brief a lawyer – incurring additional professional fees bringing them up to speed on what can often be a lot of complex financial detail.
Appointing a direct access barrister instead of a solicitor from the start can also avoid the need for a solicitor to brief a barrister to represent you in court – a further considerable saving in professional fees. The barrister can also liaise with your accountant, if you have one, or can recommend one for you.
If you’re facing a COP9 investigation, please seek specialist advice.
Patrick Cannon is highly experienced in COP9 HMRC investigations and in acting for clients subject to such investigations, including corresponding with and meeting HMRC investigators with clients and defending clients in criminal tax proceedings.
Get in touch with Patrick Cannon today.
Frequently Asked Questions
COP9 has no direct statutory basis and is simply a procedure that HMRC may follow in cases where tax fraud is suspected. Because of this, COP9 does not extend the normal statutory time limits on HMRC requests for information. HMRC has to show a reasonable basis for suspecting fraud in order to go beyond 6 years. Mere suspicion is not enough.
If you do agree to an interview, you should do so under strictly agreed conditions with full pre-interview disclosure. Ideally, you can simply decline the offer of an interview and say that you will supply written answers to any questions that HMRC wishes to submit to your professional adviser in writing.
Although HMRC will claim that this is your opportunity to show that you have not committed tax fraud, in reality, HMRC would not have proceeded this far and devoted such resources to the investigation without a strong belief that you are guilty.
The investigator will be looking for evidence of the fraud and for you to slip up in interview. One innocent mistake or contradictory explanation made under the stress of the interview with two or more investigators present and with the tape recorder running can be very difficult to explain later on, if matters then proceed to the Crown Prosecution Service or to a criminal prosecution.
Patrick Cannon has experience of COP9 and criminal investigation interviews and can advise and accompany you to any meetings with HMRC and defend you in criminal proceedings.
If you would like more information regarding how HMRC will conduct a tax investigation or guidance on COP9, get in touch with Patrick Cannon today.
There is an offer by HMRC not to prosecute you for tax fraud as long as you agree to make a full and frank disclosure of all and any tax frauds that you have committed. Be careful though as this involves making an admission of tax fraud and you risk having your name published as a tax defaulter if the tax at stake is more than £25,000.
You are likely to be criminally investigated by HMRC. However, some people have little choice but to reject the offer because if they are professionally qualified and subject to a strict professional code of conduct, admitting to tax fraud may result in loss of livelihood so it is better to reject the offer and fight on.