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.

John Hood is Moore Kingston Smith’s tax dispute resolution specialist. He is expert at dealing with complex and serious tax investigations launched by HMRC, settling matters on a civil basis. In the most serious cases, this can involve limiting the risk of the enquiry being escalated to a criminal investigation. John genuinely relishes the challenge… Read more

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