Code of Practice 9: suspected tax evasion

Tax enquiries

HMRC has formal powers to enquire into an individual’s tax return within 12 months of receiving it. When HMRC launches an enquiry, it’s the start of a complex process that needs to be handled correctly from day one.

So if you find yourself the focus of an enquiry, it’s a good idea to get professional help immediately. That’s where our Tax Dispute Resolution team comes in.

We’ll liaise with HMRC as they gather, review and analyse information, so that you don’t have to. We’ll identify how to complete each stage of the enquiry, because we understand what is fundamental to achieving progress, irrespective of HMRC’s final conclusion.

Dealing with HMRC’s procedures

If HMRC are launching an enquiry into your tax return, you’ll receive a letter from them detailing what HMRC requires you to do and what information you need to supply. If you have a representative or tax agent who filed your return, HMRC sends them a copy of the letter, additionally explaining the legislation being used to open the enquiry. It’s a good idea to engage us at this stage so we’re with you from the start.

Reason behind the enquiry

Most enquiries start because HMRC holds information that suggests that not all the income or gains were reported or there is a high risk that the return is incorrect for some reason. The enquiry can be into certain aspects or the whole tax return. For example, it might concern an offshore bank account, holiday home, company car or even medical insurance. Our team has seen every possible kind of enquiry and is adept at managing any situation.

Different kinds of enquiry

HMRC is a vast organisation and has highly trained experts dealing with a whole range of enquiries. Luckily, so do we. In fact, we’re rarely asked for help on an enquiry we’ve never seen before. We have decades of experience, so we know how HMRC operates. We’re used to digging down into the details, asking the right questions and bringing each case to a successful conclusion.

If you’d like to talk to us about a tax enquiry, don’t hesitate to get in touch with team lead, John Hood.

Code of Practice 8: complex investigations

Code of Practice 8 enquiries involve complex matters, so it is crucial that you seek specialist advice from day one. Our Tax Dispute Resolution team has decades of experience in dealing with HMRC in wide-ranging Code of Practice 8 enquiries. We’ll ensure your situation is represented fairly and the best possible outcome reached.

What is Code of Practice 8?

Where HMRC considers that a significant amount of tax has been lost due to tax avoidance, they use Code of Practice 8 to investigate the individual involved. These enquiries are conducted by HMRC’s Fraud Investigation Service, which is responsible for both civil and criminal investigations.

Dealing with HMRC’s procedures

If HMRC are investigating you under Code of Practice 8, you’ll receive a letter explaining the reason for the enquiry, enclosing a copy of the Code of Practice 8. Knowing how to respond to the letter in the first instance is vital – and that’s something that we can make sure you get right.

Next steps

In most cases, HMRC will invite you to a meeting. There is no statutory requirement for you to attend the meeting – it depends on what you want to achieve. There is no right or wrong action here as every case is different. We can advise you on the best course of action for your situation.

Meetings can often be constructive and may even result in the enquiry being dropped straightaway. We can attend the meeting with you, having first carefully reviewed recent events, tax planning and business interests.

It is understandable that sometimes you’ll feel intimidated or reluctant to discuss your affairs with HMRC for various reasons. That’s why we’re here: to take the strain so you don’t have to.

Potential outcomes

There is a danger that the Code of Practice 8 enquiry might uncover something that HMRC suspects could be deliberate or tax evasion. These enquiries often involve offshore assets or interests, such as trusts, companies and investments, and HMRC will want to check that the relevant taxes were correctly paid.

If HMRC starts to suspect the individual of deliberately understating or not declaring all their income or gains, it could elevate the matter to Code of Practice 9, suspected tax fraud or even instigate a criminal investigation with a view to prosecution. That’s why it is key that you seek professional advice to minimise the risks.

If you’d like to talk to us about a Code of Practice 8 investigation, don’t hesitate to get in touch with team lead, John Hood.

Code of Practice 9: suspected tax evasion

If you receive a Code of Practice 9 letter, it’s essential to seek independent specialist advice. In fact, in the Code of Practice 9 booklet, HMRC recommends that a specialist adviser is instructed. That way, you can ensure that you make the right decisions from the beginning.

Our dedicated Tax Dispute Resolution team specialises in Code of Practice 9 enquiries. We can either represent you throughout the investigation, or work alongside your current adviser to provide specialist advice when required.

We believe that the key to success is starting with the end in mind. So enlist us early on and we can build our strategy around your requirements, minimise your exposure and achieve your objectives.

What is Code of Practice 9?

In cases of suspected tax evasion, HMRC’s Fraud Investigations Service (FIS) conducts the investigation on either a civil or criminal level. If they decide not to pursue the investigation as a criminal case, they can opt to still investigate under the Code of Practice 9 procedure.

Ultimately, where HMRC start an investigation under Code of Practice 9, the aim is to reach a civil settlement to recover the unpaid tax, interest and penalties.

Dealing with HMRC’s procedures

If you’re being investigated under Code of Practice 9, HMRC will write to you offering you the opportunity to make a full and accurate disclosure under the terms of the Contractual Disclosure Facility (CDF).  You’ll have 60 days to decide whether to accept or reject the offer.

Along with the opening letter, HMRC also provides the Code of Practice 9 booklet, which sets out how the investigation is conducted and what is required, as well as a form to make an outline disclosure, if you accept that you acted deliberately.

Next steps

We’ll work with you to identify probable areas of concern and advise you on whether to accept or reject the CDF offer. We recommend that you decide whether to accept or reject as soon as possible to ensure you meet the 60-day deadline — though in exceptional circumstances, HMRC may be prepared to provide more time.

Potential outcomes

Make a full and accurate disclosure

If you accept that tax was evaded, considerable care should be taken to disclose all the relevant issues. HMRC does not generally elevate cases for criminal investigation where a complete and correct disclosure is made.

HMRC will request that you sign a statement saying you deliberately evaded tax and provide an outline disclosure of what happened, who was involved and when the problem first started.  You’ll also be asked to provide details of any other unpaid taxes.

HMRC request for a meeting

Once your response is submitted, we can meet with HMRC to discuss their principal concerns. Usually, you’ll be invited to attend the meeting. HMRC often infers that not attending the meeting will affect the level of cooperation and tax-geared penalties that are applied to the tax paid late. In reality, there is no statutory obligation for you to attend, though it could help expedite matters.

If you’d like to talk to us about a Code of Practice 9 investigation, don’t hesitate to get in touch with team lead, John Hood.

Voluntary disclosures – the belt and braces approach

If you’re considering making a voluntary disclosure to HMRC, getting your strategy right from day one is the best way of making sure you get your desired outcome. So it’s essential that you get specialist tax advice from the beginning.

Our dedicated Tax Dispute Resolution team can help. We have a proven track record of successfully resolving all levels and types of voluntary disclosures to HMRC.

We tailor our approach to meet your requirements and understand the importance of clear and effective communication throughout, minimising any stress and disruption.

We can handle the whole process on your behalf. We’ll work with you to disclose the taxes paid late, interest and any penalties that are due. And we’ll provide HMRC with all the necessary information to check that the disclosure is complete and accurate. Our aim? To get your voluntary disclosure resolved as quickly and effectively as possible.

Why make a voluntary disclosure?

Taxpayers who make a voluntary disclosure are looked on favourably by HMRC, who offers considerable beneficial terms to those doing so.

  • A streamlined and simplified system for disclosing unpaid taxes
  • Keep your professional costs to a minimum
  • Significantly reduce tax-geared penalties
  • A low-impact approach with usually no need to meet HMRC
  • Avoid a potential criminal investigation

If you’d like to talk to us about a making a voluntary disclosure to HMRC, don’t hesitate to get in touch with team lead, John Hood.

Alternative dispute resolution

Alternative dispute resolution (ADR) is for cases where an individual or company and HMRC disagree over the tax liability, or where communication between them has broken down.

ADR can help both sides reach an agreement or identify the contentious issue. It is a way of attempting to resolve the matter without the need, cost and hassle of involving the tax tribunal.

How we can help

Getting expert advice at the outset of ADR can make an enormous difference to the outcome. Our Tax Dispute Resolution team knows the ADR system inside out. And in our experience, ADR almost always helps both sides clarify the disputed issues.

We’ll walk you through the whole process, helping you prepare for your mediation meeting and give careful consideration to the statement setting out the contentious points. In short, we’ll shoulder the burden so you don’t have to.

How the alternative dispute resolution process works

HMRC allocates a mediator to work with both sides to attempt to resolve the matter. Alternatively, an independent commercial mediator can be appointed at your cost.

The mediator requires your and HMRC to participate fully in the process (which must not exceed 90 days) and provide all information requested.

Normally, both sides are required to attend a mediation meeting, which the mediator proactively facilitates.

When can alternative dispute resolution be used?

ADR can be used during a tax enquiry or once HMRC has decided what tax is payable and the matter is heading towards a formal decision by the tax tribunal. However, HMRC does not accept all cases into ADR and considers whether the application is relevant.

It’s worth noting that ADR does not affect your right to appeal to the tax tribunal or request for a statutory review of HMRC’s decision.

If you’d like to talk to us about alternative dispute resolution, don’t hesitate to get in touch with team lead, John Hood.

Lead Contact

John Hood

Partner
+44 (0)20 7566 3717
Email: John Hood

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