This guide explains what happens and what to do if you receive a letter and a Code of Practice 9 (COP9) from HM Revenue & Customs (HMRC) saying that they suspect you of committing tax fraud, and offering you a contract though the contractual disclosure facility (CDF). It also explains what to do if you want to own up voluntarily to committing fraud.
CDF is only suitable for people who want to admit to tax fraud. It is not for people who only want to tell HMRC about errors, mistakes or avoidance schemes where there isn't a fraud.
CDF starts on 31 January 2012. If you decide to complete a CDF form and send it to HMRC before that date, they will not begin to deal with it until 31 January 2012.
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The contractual disclosure facility (CDF) is the opportunity to tell HMRC about any tax fraud you have been involved in.
If they write to you because they suspect you have committed a tax fraud, HMRC's letter will offer you a CDF contract, and they will include an acceptance letter, a denial letter, a disclosure form and a copy of COP9.
Under CDF, you have 3 options:
If you decide to admit to committing fraud, you need to think about whether using CDF is right for you.
Entering into a CDF contract with HMRC means you are both agreeing that you will stick to the terms and conditions of the contract.
HMRC will:
You will:
Entering into this contract to tell HMRC about all the tax and duties you have deliberately evaded is called 'formal disclosure'. You might see this phrase used in letters and documents sent to you.
Formal disclosure is the only way that you can admit to a tax fraud without HMRC criminally investigating you. If you decide that this is right for you then you need to sign the acceptance letter and complete the outline disclosure form.
If you meet your side of the contract, you will ensure that any penalties are closer to the lower penalty levels.
You have 60 days to decide if you do or don't want to tell HMRC about tax fraud. The 60 day period will run for 60 calendar days after you've received the CDF letter from HMRC.
During those 60 days, HMRC won't make contact with you unless you have told them that you do or don't want to provide details of tax fraud. They can still take action against goods that you own or possess, start or continue debt collection or any other action that is needed as part of HMRC's legal obligations.
If you have any questions about how CDF works during the 60 days, you can contact HMRC, but they strongly advise that you get independent advice before you complete any form or sign a letter.
Get more advice on the contractual disclosure facility
If you decide that you don't want to admit to tax fraud, you can sign and return the CDF denial letter that HMRC sent you, within the 60 day time limit. Signing the denial letter means that you may still work with HMRC to make sure your taxes are correct and up to date.
If you choose to follow the denial route, HMRC can begin a criminal investigation into your tax affairs at any time, and the letter you have signed can be used in court as evidence to show that you intended to deliberately mislead HMRC.
If HMRC don't hear from you within the 60 days, either to say that you want to accept the offer of a contract, or that you don't want to admit to a fraud, then they will consider that you have chosen not to cooperate. They will then begin either a civil or a criminal investigation into the tax fraud they suspect you've committed. Remember that a criminal investigation and prosecution could result in a criminal record, confiscation of assets or even going to prison.
You don't have to wait for HMRC to contact you if you want to own up to committing fraud. By completing the contractual disclosure form CDF 1 you can ask HMRC to consider you for a CDF contract.
HMRC don't have to offer you a contract, and won't be able to if you are already involved in a criminal investigation or another law enforcement department is dealing with you. If you are already dealing with HMRC over tax issues, you should talk to the officer dealing with your case.
Contractual disclosure request form
COP9 tells you in detail about how HMRC investigates fraud, what it means for you and what your rights are.
