Contractual Disclosure Facility & Code of Practice 9

You should seek expert advice if you receive a letter from HMRC inviting you to use the CDF The reason for this is simple: HMRC suspects you have committed tax fraud.

You need to act quickly otherwise HMRC will undertake its own investigation and may build a criminal case with a view to prosecuting you.

HMRC usually deals with cases of suspected tax fraud through the CDF using civil powers. You will be asked to make full disclosure of all deliberate (and non-deliberate) conduct that has led to errors in your tax affairs, then HMRC will not seek to prosecute you.

If you co-operate fully:

• HMRC will leave you to work with your advisor on the disclosure report

• penalties will be reduced and ’naming and shaming’ can be avoided
  

• HMRC will look to conclude the investigation without unnecessary delay

• you will be asked to offer a monetary sum to cover the tax, interest and penalties to settle all historic matters.

If you do not co-operate:

• HMRC will take over the investigation

• HMRC might decide to prosecute you

• information about your financial and business affairs could be formally requested from third parties, which could be damaging to your reputation

• penalties will be higher

• there is a risk of you being publicly 'named and shamed.

The CDF is complex and far from routine. It involves admitting that tax has been lost because of deliberate conduct and means HMRC may be able to assess up to 20 tax years. Accusations of tax fraud should not to be taken lightly. However, the process is manageable with the right support.

How we can help

Any tax investigation or disclosure is sensitive and complex. The tone of HMRC’s correspondence is intimidating and dealing with HMRC can be stressful at the best of times. However, you will avoid being prosecuted for tax fraud if you meet your obligations under the CDF and make full and frank disclosure to HMRC.

Consult Hamill experienced Tax Resolutions team can help you navigate the CDF process and ensure you meet your obligations to ultimately settle matters with HMRC. We also work with other accountants and solicitors on a regular basis, providing support to their clients who are invited to use the CDF. It is also possible to make a voluntary request to participate in the CDF to secure immunity from prosecution if protection is needed. We can make recommendations if this route is appropriate based on the facts of your case. If you genuinely believe that a loss of tax has not been brought about deliberately, you should not agree to the CDF as a matter of convenience. In these circumstances, you should reject the CDF offer. HMRC will then start its own investigation, reserving the right to pursue a criminal investigation. Although the 'co-operative denial' route is no longer available, we can help you frame your response in such a way that will encourage HMRC to work with us to resolve any perceived issues.