HMRC, in its effort to provide a fair and transparent tax system, has recently updated its code of practice to offer taxpayers an opportunity to rectify their UK tax affairs on a civil basis rather than facing criminal consequences.
Known as Code of Practice 9 (COP9), this framework allows taxpayers to voluntarily disclose tax fraud and settle the outstanding taxes and penalties they owe. In exchange, HMRC will abstain from initiating a criminal investigation into the disclosed behaviour. This enhanced version of COP9 is a crucial component of HMRC’s comprehensive strategy to combat tax fraud through civil investigations.
The updated COP9 brings about notable changes. Firstly, it explicitly informs recipients that the contractual disclosure facility (CDF) is the designated avenue for utilizing the code as an alternative to undergoing a criminal investigation. Additionally, it establishes clear terms and conditions within the CDF contract to ensure recipients have a precise understanding of their obligations, HMRC’s expectations throughout the investigation process, and the severe consequences of non-compliance.
Furthermore, the revised COP9 introduces new sections to address specific scenarios. These sections highlight the circumstances in which a COP9 case may escalate to a criminal investigation and potential prosecution. They also clarify that COP9 can cover instances of fraud related to HMRC functions not exclusively involving tax. Moreover, the updated code outlines the actions HMRC can take if a COP9 recipient retracts their admission of deliberate behaviour after accepting the CDF offer.
By implementing these updates, HMRC aims to create a more transparent and effective framework for resolving tax issues. The enhanced COP9 emphasizes HMRC’s commitment to facilitating compliance and ensuring a fair tax system for all taxpayers.