As of 14 June 2023, HMRC has significantly updated the terms of its CDF under Code of Practice 9 (COP9). We comment on the key changes below, namely the requirement to attend meetings and for liabilities to be paid within a defined period.

What is the CDF?

HMRC offers individuals the CDF where it suspects serious tax fraud. Under the terms of the CDF, HMRC requires taxpayers to fully disclose any loss of tax that has been brought about by deliberate behaviour. In doing so, HMRC commit to not commencing a criminal investigation provided the contractual requirements of the CDF are met.

Previously, the contractual requirements to ensure that HMRC would not commence a criminal investigation were:

• Submitting a ‘valid’ Outline Disclosure, detailing all ‘deliberate’ errors and failures to HMRC within 60 days; and

• Submitting a certified statement that you have made a full disclosure of all errors in conjunction with certificates of assets and liabilities and certificates of banking and credit card accounts.

However, the changes from 14 June 2023 have placed an additional two requirements for the CDF, as follows:

• Fully cooperating with HMRC to include personally attending meetings that HMRC may request, retaining relevant records and documentation; and

• Repaying any liabilities owed within a defined period.

What do these changes mean?

These changes have certainly strengthened HMRC’s position in relation to CDF disclosures; by placing additional contractual obligations on individuals in order to receive the protection from criminal prosecution, which the CDF provides.

Meeting with HMRC

The most notable change for many will be HMRC formalising their preference for taxpayers to attend meetings as part of the CDF process. Going back many years, taxpayer meetings with HMRC were previously an integral part of the CDF process. However, in more recent years we have concluded a number of CDF cases, promptly and successfully, without the need for taxpayers to attend a meeting with HMRC.

While in some cases such meetings can be beneficial, in our experience, they can also often be an unnecessarily stressful experience for the taxpayer without significantly helping HMRC in progressing the case.

It will remain to be seen how HMRC will implement this new obligation in practice. Interestingly HMRC’s new guidance remains silent with regards to taxpayers with specific needs, such as health concerns for example. We would expect HMRC to take such matters into account where a meeting with HMRC would not be suitable.

Repaying liabilities

Ensuring that any settlement terms are fully adhered to when agreeing to a payment plan will now be vitally important. Taxpayers will therefore need to be confident that they can realistically afford any such payment plan agreed with HMRC.

Do I need representation? Should I engage a tax investigations specialist?

Absolutely. HMRC’s own CDF guidance advises individuals to engage specialist representation. Given the potentially increased risk of HMRC seeking criminal prosecution, in our view, it has never been more important to engage a tax investigation specialist for those who either wish to make a voluntary COP9 disclosure via the CDF or receive a letter from HMRC, which states it suspects them of tax fraud.

How we can help

Should you or your client wish to take advantage of the terms of the CDF, in order to received guaranteed protection against criminal prosecution, we can ensure that all of the contractually required obligations are fully met. We will also work with you and any existing advisor to prepare a suitable valid Outline Disclosure, within the required timeframe in order to enter into the CDF.

Should a meeting with HMRC be necessary our team, which includes ex-HMRC Fraud Investigation Service Officers, will fully prepare you for the meeting, attend the meeting with you, ensuring that your rights are protected and that HMRC correctly follows its own processes.

We will consider your personal circumstances and where necessary make representations to HMRC in terms of attending meetings. In addition, we will negotiate settlement terms on your behalf to ensure HMRC are not enforcing an unfair repayment period for you, and that all your financial circumstances are fully understood and factored into any time to pay arrangement.