CDF offer review
The offer, deadline and consequences of acceptance or rejection are reviewed before a response is made.
COP9 is HMRC's civil investigation-of-fraud procedure for selected cases where HMRC suspects tax fraud. The Contractual Disclosure Facility gives the recipient a defined opportunity to disclose deliberate behaviour and other tax irregularities under contractual terms.
The 60-day period is not the time to reconstruct twenty years of figures in full. It is the period for deciding whether to accept or reject the CDF and, if accepting, preparing a valid and honest Outline Disclosure covering the deliberate behaviour being admitted.
The date of receipt is important because the CDF response period is time-limited.
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The first decision is whether the taxpayer can honestly accept the CDF terms and disclose deliberate behaviour, or whether the offer should be rejected because there was no deliberate tax loss.
The Outline Disclosure does not need every final calculation, but it must honestly describe the deliberate behaviour being disclosed. Accepting the CDF without understanding that admission, or rejecting it without analysing the facts, can have serious consequences.
The engagement can begin immediately after receipt of a CDF offer or later during the formal disclosure and settlement process.
The offer, deadline and consequences of acceptance or rejection are reviewed before a response is made.
The facts are examined to identify what, if anything, can honestly be characterised as deliberate behaviour.
The initial description of deliberate and non-deliberate irregularities is prepared within the CDF framework.
Historic tax liabilities, interest, penalties, explanations and supporting records are reconstructed in detail.
Chronology, disclosure scope and expected questions are prepared before meetings with Fraud Investigation Service.
The final tax, interest, penalties and payment position are reviewed before the case is concluded.
We identify the receipt date, deadline, suspected behaviour and immediate decision required.
The deliberate behaviour and other known irregularities are described honestly and sufficiently.
Records, taxes, years, interest and penalties are reconstructed in detail.
The disclosure, HMRC questions, tax and penalty settlement are taken through to resolution.
HMRC's CDF undertaking is powerful but specific. It relates to the suspected frauds connected with the deliberate behaviour honestly disclosed under the contractual terms.
Accepting the CDF is an admission that deliberate behaviour caused a loss of tax, duty or a relevant HMRC-administered payment. It should therefore never be treated as a routine form-filling exercise. Equally, rejection should only follow a genuine conclusion that there was no deliberate behaviour of the kind alleged.
HMRC's current accessible guidance on the civil investigation-of-fraud procedure and the CDF.
Official COP9 guidance ↗HMRC's COP9 guidance explains that taxpayers can authorise an adviser to deal with the investigation.
Agent authorisation ↗HMRC gives 60 days from receipt of the CDF offer to accept or reject it.
Not necessarily. The initial Outline Disclosure does not need every final calculation where they cannot reasonably be obtained in that period, but it must honestly describe the deliberate behaviour being disclosed.
Acceptance involves admitting deliberate behaviour that brought about a relevant loss to HMRC. That is why the facts should be reviewed carefully before the CDF is accepted.
HMRC undertakes not to commence a criminal investigation into the suspected frauds connected with the deliberate behaviour properly disclosed under the CDF terms. The undertaking is not a blanket immunity for unrelated offences or incomplete disclosure.
HMRC states that it will begin its own investigation, which may be criminal. Rejection should therefore reflect a genuine belief that there was no deliberate behaviour causing the relevant loss.
Where deliberate behaviour is involved, HMRC's COP9 guidance explains that tax, interest and associated penalties can generally be pursued for periods extending up to twenty years, subject to the applicable legislation.