The Contractual Disclosure Facility is used by HMRC to investigate suspected cases of tax fraud. All such enquiries are dealt with under Code of Practice 9 (http://www.hmrc.gov.uk/admittingfraud/cop9.pdf)
The two bodies of offices within HMRC who carry out these investigations are the Special Investigations offices, who deal with cases where significant amounts of tax or serious issues are at stake, and the Civil Investigation of Fraud offices, who take responsibility for enquiries where smaller sums of tax are thought to be at stake.
On issuing COP9, HMRC offers a ‘Contractual Disclosure Facility’ (“CDF”), whereby HMRC undertakes not to pursue a criminal investigation into any tax fraud disclosed, so long as you undertake to make a full disclosure of tax irregularities, under the CDF.
To gain the benefit of the HMRC undertaking not to pursue a criminal investigation, you must confirm to HMRC within sixty days of the issue of COP9, that you undertake to make a full disclosure under the CDF, and you must then fully comply with that undertaking.
To comply with your undertaking, you need to complete the two disclosure stages:
provide a valid outline disclosure of the tax frauds (“outline disclosure”)
provide a certified statement that you have made a full, complete and accurate disclosure of all tax irregularities together with certified statements of your assets and liabilities, and of all bank accounts and credit cards you have operated (“formal disclosure”).
This is the only way that you can be certain that HMRC will not carry out a criminal investigation into the suspected tax fraud.
Great care is needed in dealing with the CDF, whether dealt with by the Special Investigation or Civil Investigation of Fraud offices, to ensure that any disclosure made is full and complete, so that no criminal prosecution can take place.
The seriousness of enquiries carried out under the COP9 Contractual Disclosure Facility procedure cannot be overstated, and it is worthy of note that HMRC’s COP9 includes the following advice.
You are strongly advised to seek independent professional advice. If you already have an appointed adviser you should contact them immediately. However, many people find it helpful to appoint a specialist adviser who is familiar with this Code, in addition to their regular adviser.