Serious tax investigations are dealt with by HMRC’s Fraud Investigation Service (FIS). These are extensively trained and often experienced individuals who are tasked with investigating cases where there is either a suspicion of tax loss through an individual’s deliberate acts or omissions, or a belief that too little tax has been paid but fraud is not suspected.
How do HMRC investigate the most serious cases?
Code of Practice 9 (COP9)
Cases are dealt with under Code of Practice 9 where HMRC either suspect or the individual voluntarily discloses that their deliberate action or inaction has led to an insufficient amount of tax being paid. HMRC refer to such behaviour as “tax fraud” but this is more commonly referred to as tax evasion. Code of Practice 9 cases are now dealt with under HMRC’s Contractual Disclosure Facility (CDF) and taxpayers can either be issued with COP9 by HMRC, or can choose to voluntarily use the facility.
There is a formal process to follow with strict deadlines to meet so assistance from an experienced Tax Disputes advisor is highly recommended and it is better to appoint a COP9 specialist advisor at the earliest opportunity. The principal benefit of Code of Practice 9 for taxpayers is that provided a full disclosure is made then HMRC will guarantee the individual receives immunity from criminal prosecution.
Code of Practice 8 (COP8)
Cases dealt with under COP8 are those where HMRC suspect there has been an insufficient amount of tax paid, but “fraudulent behaviour” is not suspected. HMRC investigations into tax avoidance arrangements or where there is potentially a significant loss of tax revenue are typically dealt with under COP8.
How can we help you deal with serious tax investigations?
HMRC receives a vast amount of information and data from third parties both within and outside the UK, which has led to an increase in the number of COP9 and COP8 cases being opened.
Menzies experts are vastly experienced in guiding clients through all serious tax investigations and disclosures. We can help clients achieve the best possible outcome and have a track record of doing just that.
For many reasons it is always better to be proactive and, under expert guidance, approach HMRC before they approach you if that remains an option.