A COP9 investigation is HMRC’s most serious type of civil tax investigation. It is carried out by HMRC’s Fraud Investigation Service where there is suspicion of deliberate behaviour leading to a loss of tax. If you receive a COP9 letter, HMRC believes there may have been deliberate tax irregularities. These investigations are handled differently from standard HMRC enquiries and require careful handling from the outset.

When HMRC opens a COP9 investigation, it offers the Contractual Disclosure Facility. This is a one-time opportunity to avoid criminal prosecution. To accept the CDF, you must admit deliberate tax irregularities and fully disclose all relevant issues, which may go back up to 20 years. In return, you will be required to pay the tax due, along with interest and a penalty. Penalties arise from the underlying behaviour and would apply regardless of whether the matter is handled under COP9, although the level of penalty may vary depending on the circumstances. Penalties for deliberate behaviour typically start from 35% and may be higher depending on the circumstances.

Tax fraud is a serious offence and carries the potential for a custodial sentence. However, one of the key benefits of accepting the Contractual Disclosure Facility (CDF) is that HMRC guarantees immunity from prosecution, provided a full and accurate disclosure is made. Engaging specialist advisers is often the first step in ensuring criminal prosecution and the risk of imprisonment are avoided.

HMRC do have powers to ‘name and shame’ a taxpayer, thereby publishing their details on their online ‘deliberate tax defaulters’ list. This occurs when a taxpayer has acted deliberately, the tax liability is more than £25,000, and the taxpayer was charged a penalty above the minimum rate for deliberate irregularities. HMRC will not award the minimum penalty when a taxpayer has not fully cooperated with HMRC to correct their tax affairs and make a full disclosure. This highlights the importance of engaging a specialist to assist you with making a full and accurate disclosure to HMRC, helping achieve the minimum penalties, and preventing your details from being published.

If you receive a COP9 letter, HMRC is offering you the opportunity to disclose tax irregularities through the Contractual Disclosure Facility. You will normally have 60 days from the date of the letter to decide whether to accept or reject the offer. This is a critical decision that can significantly affect the outcome of the investigation. Before responding, you should seek specialist advice, avoid contacting HMRC directly, and ensure you understand whether the behaviour in question could be considered deliberate. We can review your circumstances, explain the risks of accepting or rejecting the CDF, and manage communication with HMRC on your behalf.

If HMRC receives neither acceptance nor rejection, it will continue to investigate your tax affairs, which could lead to criminal prosecution. Even if HMRC does not pursue criminal proceedings, any penalties levied under the civil regime will be significantly higher due to the failure to cooperate with the investigation.

At the outset of a COP9 investigation, HMRC does not disclose the evidence it holds. This makes it difficult to assess the risks without specialist knowledge. Meetings with HMRC can also be complex and challenging without proper representation. HMRC itself recommends seeking specialist independent advice. A specialist adviser can help you understand your position, respond effectively, and reduce the overall cost and disruption of the investigation. Our team specialises in COP9 cases and supports clients through every stage of the process, providing clear advice and managing all engagement with HMRC on your behalf.

Accepting the CDF means admitting deliberate behaviour and agreeing to make a full disclosure of all irregularities. In return, HMRC offers immunity from criminal prosecution. You must also cooperate fully with HMRC and repay any tax, interest and penalties due. However, accepting the CDF is not always appropriate. If there has been no deliberate behaviour, accepting it may expose you to unnecessary penalties. Each case depends on the facts. A specialist adviser can assess your position and advise whether accepting or rejecting the CDF is appropriate.

You should only reject the CDF offer, and deny tax fraud, if you genuinely believe you have not deliberately filed an inaccurate return or deliberately failed to file a return altogether. Determining whether something has been done deliberately or carelessly is not always straightforward. Given the seriousness of the decision and the potential consequences, it is important the right decision is made. If HMRC believes you have committed serious fraud, it will need to be persuaded otherwise, and specialist representation is key in these circumstances.

Accepting the CDF sets the process in motion. HMRC will first classify the case as ‘simple’ or ‘complex’, with complex cases requiring more detailed work and often multiple meetings. You will then need to prepare and submit a full disclosure report covering your tax affairs, sometimes going back up to 20 years. HMRC will review this and either accept it as complete or raise further queries. Once accepted, penalties will be applied, typically ranging from 35% to 100% of the unpaid tax for deliberate behaviour where the disclosure was prompted by HMRC. The final penalty depends on your level of cooperation and the quality of your disclosure, although this can be challenged if appropriate. If the disclosure is handled poorly or is incomplete, penalties may be higher and HMRC can withdraw immunity, which could still lead to a criminal investigation.

HMRC will either start an investigation or accept your rejection and issue confirmation that it no longer suspects you of fraud. However, in cases where a disclosure is required for non-deliberate irregularities and a full disclosure is not made, HMRC will almost certainly continue its investigation. What constitutes a full disclosure will depend on relevant statutory time limits. If HMRC still believes a disclosure of deliberate irregularities should have been made with an acceptance of the CDF offer, it may commence a criminal investigation with a view to prosecution.

Yes. The COP9 Contractual Disclosure Facility process can also be used where a taxpayer wishes to voluntarily disclose a tax fraud to HMRC. We adopt this approach for clients who accept they deliberately understated the tax they owe to HMRC. Making a voluntary disclosure through the CDF can secure immunity from prosecution in return for a full and accurate disclosure. If this situation applies to you, we strongly recommend seeking specialist professional advice before contacting HMRC.

HMRC states that taxpayers who take reasonable care when completing their returns will not be penalised, but careless or deliberate irregularities can attract penalties. For deliberate irregularities where the disclosure is prompted by HMRC, penalties typically range from 35% of the unpaid tax to as much as 200% in certain offshore cases. These penalties are calculated as a percentage of the unpaid tax and depend on the taxpayer’s behaviour and level of cooperation during the investigation. Penalties for careless irregularities may also be suspended in some circumstances. Our team considers penalties from the outset and work to achieve the lowest penalty that can reasonably be applied based on the facts of each case.

The length of a COP9 investigation depends on the complexity of the taxpayer’s affairs and the scope of HMRC’s enquiries. In many cases, it can take between 9 and 36 months to complete, although more complex cases involving multiple years of tax, offshore matters, or extensive financial records may take longer. The timeline is influenced by factors such as the complexity of the case, the quality and completeness of the disclosure, whether HMRC raises further queries, and the level of cooperation throughout the process. Working with specialist advisers can help ensure the disclosure is handled efficiently and may support a quicker resolution.