HMRC Civil Investigation of Fraud (CIF) Investigations – Code of Practice 9

HMRC’s Specialist Investigations directorate (SI) undertakes the most serious or complex investigations, whether involving suspected serious fraud or legal avoidance not involving fraud. Whichever approach they take, a letter from SI is never good news.

On this page we discuss civil investigations into suspected serious fraud, which can be undertaken either by Local Compliance teams or by SI.

The bad news...

HMRC’s Civil Investigation of Fraud (CIF) teams undertake investigations into suspected serious fraud under Code of Practice 9 (COP 9).  Local CIF teams deal with ‘smaller’ cases and larger cases are dealt with by HMRC’s Specialist Investigations directorate (SI).  The parameters are as follows:

• Local CIF        £75,000  minimum expected extra tax, interest and penalties

• SI CIF             £500,000   minimum expected extra tax, interest and penalties

These are the minimum extra amounts that HMRC have in mind before they will open an investigation under COP 9. So you can appreciate that any investigation by HMRC under CIF procedure needs to be taken extremely seriously.

In addition to the financial risk, there is also the risk that HMRC may initiate a criminal investigation if they conclude that materially false or misleading statements have been made in the course of a COP 9 investigation.

HMRC’s CIF teams are staffed with their most highly trained investigators, backed up by a wide range of powers and extensive access to information. So if you have been targeted for investigation by a CIF team it really does make sense to get some help from a specialist advisor  experienced in dealing with CIF.

The not-so-bad news...

It’s hard to find any really ‘good’ news in a CIF investigation.  But there are some relatively positive aspects to the process. Here are some of the main ones:

• It’s not a criminal investigation. A criminal prosecution is undoubtedly the worst case scenario, but under COP 9 you have a guarantee that HMRC will not seek to prosecute any irregularities disclosed to them under the process. That includes irregularities which they did not suspect at the outset.  If you have been offered Code of Practice 9, the only reason why you would ever face prosecution is if you have made ‘materially false statements or materially false documents are provided with intent to deceive in the course of a civil investigation’ [Code of Practice 9 leaflet, page 2].  So the good news is that whether or not you get prosecuted is entirely in your own power; if you make a full disclosure to the best of your knowledge you have nothing to fear from the risk of prosecution.

• The disclosure process is in your hands. If you decide to co-operate with HMRC under the COP 9 procedure you will be given time to produce a full disclosure report, which you will certify as your full disclosure under the process. As long as the work on the report progresses to a satisfactory timetable and quality, HMRC will leave you and your advisor alone to get on with producing the report. Subsequent settlement negotiations will be conducted by your advisor and it is not even necessary for you to meet with HMRC for the final settlement meeting if you don’t want to (our clients invariably don’t). A properly handled COP 9 disclosure will therefore result in very little direct contact between you and HMRC, thus reducing the stress upon you.  The downside is that a badly handled process can result in massively increased stress levels (and tax demands) if HMRC form the opinion that the disclosure is materially incomplete.  But with an experienced advisor on board the whole process can be surprisingly civilised, given that you are being investigated for suspected serious fraud by HMRC’s elite Inspectors.

• Things can be dealt with quickly when handled expertly.  Compared with the alternative – a long drawn out investigation by HMRC – COP 9 investigations can be dealt with relatively quickly when handled properly, thus enabling you to put the experience behind you and move on.

• Penalty discounts are maximised.  By getting onto the front foot with the disclosure process you will obtain the maximum benefit of the penalty discounts available.  This will amount to a sizeable proportion of the tax involved and will probably easily recoup the cost of using an experienced specialist.

These are just some of the main pros and cons of the Civil Investigation of Fraud procedure. For further practical advice see below, or give us a call on 0845 643 5450 for confidential free discussion regarding your particular circumstances.

How Covertax can help you

We have many years experience in dealing with CIF investigations, through all its evolution back to the days when it was dealt with by the Enquiry Branch of the Inland Revenue under what was then called ‘Hansard procedure’.  In dealing with so many investigations we have developed our particular methodology, which combines technical expertise with our own brand of personal service and support for our clients through what is always a trying experience.

Because we have handled so many disclosures, we are able to deploy tried and tested standard methodologies which we have developed over the years.  This increases our efficiency and enables us to deliver better value for money to you.  You are not paying for anybody’s learning curve.

Although our team are highly skilled tax experts, we believe in personal service.  We also know that a good working relationship with our clients is a vital tool in achieving a great result as cost-effectively as possible. We would always recommend to clients that they choose an advisor who is both technically expert, but who they also feel comfortable with on a personal level. 

Call Tony Borman on 0845 643 5450 for a free confidential initial discussion.