What is the Contractual Disclosure Facility and Code of Practice 9?
The Code of Practice 9 is a code that is issued where the HMRC (HM Revenue Customs investigation) feel there has been incidents of tax fraud. Typically, this type of offence warrants a criminal investigation, however, the issuance of Code of Practice 9 allows the opportunity to make a full disclosure under a Contractual Disclosure Facility (CDF) which is a contractual arrangement whereby you have up to 60 days to respond with a full disclosure of your criminal conduct. Upon receipt of the disclosure within this time frame, the HMRC will not pursue criminal investigation.
What is a CDF?
The CDF contract includes an acceptance letter, a rejection letter, a disclosure form and a copy of Code of Practice 9. This means that you have two options enclosed in the CDF: accept or reject the offer.
What happens if you accept the offer and disclose that you have committed fraud?
If you sign the contract and complete the disclosure form, you have contractually bound yourself to the terms of the Contractual Disclosure Facility. This means that the HRMC will not bring forward a criminal investigation intending to prosecute you. What will happen instead is that you will admit that you have caused a loss of tax and disclose the details of this tax loss. You are required to do so within 60 days and then you are asked to give additional details following this 60-day period. By signing the CDF, your cooperation not only removes and guarantees that there will be no criminal investigation but also ensures the penalties you face will be on the lower end of the spectrum.
What do I have to describe if I fill out the disclosure form?
Not only are you asked to accept or own up to deliberate and fraudulent actions, you must outline enough detail so to ensure that the contract terms are fulfilled and that the HMRC has enough details and information to forego a formal criminal investigation. This includes outlining exactly what you did, when you did it, how exactly you went about it and who else was involved. You must also outline how you benefitted from the actions, namely in a financial manner but also the other benefits you may have reaped as a result.
What happens to the other people I name in the disclosure?
If you include and name other people and entities, you are asked to also include their address and contact information. You are asked to outline their involvement or the impacts of your actions on or with these named parties. It is important to name these people without fear of consequence as the contractual terms of the CDF indicate it is between YOU and the HMRC and therefore the same process or consequences outlined in your CDF cannot be brought upon others named during the process.
What happens if the HMRC feels my disclosure is incomplete?
Should you omit information or should the HMRC feel that you may not have disclosed all your actions or knowledge as it pertains to these actions, you become subject to a civil or criminal investigation, depending entirely on the circumstance and details of the situation at hand.
Are there ways to extend the 60-day period outlined in the CDF?
The 6o day period is relatively standard and starts as at the day you receive the letter and the Contractual Disclosure Facility. The 60 days are calendar days (i.e. not business days or weeks). If you require an extension for exceptional or extenuating circumstances, you can contact the HMRC by email or phone for a response between 1-7 days.
Otherwise, within the 60 days you will not hear from the HMRC until you submit your acceptance or rejection.
What happens if you reject the offer and deny the claims?
If you choose to reject the offer presented in the CDF, you are essentially denying your fraudulent actions and are subject to criminal investigation into your tax affairs at any time. The rejection notice or letter can also be used against you should you be found guilty.
What if you don’t respond to the CDF at all (i.e. you don’t accept or reject the letter)?
The assumption by the HMRC if you do not respond one way or the other is that you are choosing not to be cooperative and therefore you are subject to civil and/or criminal investigation.
Who do you contact with questions about CDF and how it works?
HMRC explicitly advices independent legal advice or consultation before filling in any CDF documentation. If, however, you have questions about the documents or the process you can contact the HMRC directly and their help desk will answer technical questions and explain the language and expectations from the questions outlined in the CDF and relevant documents. They cannot answer advice about your case or anyone’s case nor can they guide or advise your decisions. They are not able to answer hypothetical questions either.
Where do I send the CDF and relevant documentation upon completion?
When you have completed the documentation, you can send it to the address on the original letter and/ or envelope. Should you lose or not have this letter, you can look up the HMRC Fraud Investigation Service address on their website or call the help desk.
Who can I ask for advice, if not the HMRC?
If you do not have an adviser at the time of receipt of letter, you are advised to find and appoint one. There are many advisers and lawyers who specialize in tax fraud and issues and even those who Specialise in the Code of Practice 9 specifically.
What are the future implications of entering a contract?
Though a criminal investigation is avoided, you will be expected to recover the tax lost or foregone by your fraudulent actions. The HMRC reserves the right to see this recovery over the course of up to 21 years depending on the amount owing/ outstanding and the circumstances of the situation.
If you have received a letter of Code of Practice 9 from HMRC, please do not delay and give our experienced advisers a call or fill in the form below for free and no obligation advice on how to file your CDF.