.png)
Navigating the Contractual Disclosure Facility process can raise many questions. Below, you’ll find detailed responses to the most common questions about the facility. If you’ve received a Code of Practice 9 (COP9) letter or think you may require the CDF, we strong advise that you don’t navigate this alone. Contact Tax Dispute Experts today for a confidential consultation and expert guidance.
What is the Contractual Disclosure Facility?
The Contractual Disclosure Facility is an HMRC initiative allowing taxpayers to disclose deliberate tax errors in exchange for immunity from criminal prosecution. It is designed for cases where HMRC suspects tax fraud and is outlined in HMRC’s COP9, which details the procedures and obligations involved.
What happens when I receive a letter relating to the Contractual Disclosure Facility?
Upon receiving a COP9 letter, you have 60 days to respond by either accepting the CDF offer and submitting a full disclosure or rejecting the offer. Failure to respond can lead to further investigation.
Should I accept the Contractual Disclosure Facility offer?
Accepting the CDF offer means you receive immunity from criminal investigation and prosecution, provided you:
Admit to Deliberate Behaviour: You must acknowledge any deliberate tax fraud.
Make a Full Disclosure: Provide a comprehensive account of all omissions, errors, or irregularities.
Cooperate Fully: Attend any requested meetings, maintain relevant records, and repay any liabilities within the stipulated timeframe.
By accepting the CDF offer, you are acknowledging that you committed tax fraud, which will result in higher financial penalties compared to cases of non-deliberate inaccuracies. Therefore, it is crucial to ensure that your actions were indeed intentional according to HMRC’s behaviour guidelines. Seek professional advice before making this decision.
How do I accept the Contractual Disclosure Facility offer?
To accept the CDF offer, you must sign the CDF contract and submit a detailed Outline Disclosure form within 60 days, which includes all deliberate errors in your tax affairs.
What happens if I accept the Contractual Disclosure Facility offer?
Once you accept, you’ll need to fully cooperate with HMRC’s investigation, attend any requested meetings, and ensure all liabilities are paid within the specified timeframe. HMRC will review your disclosure and, if satisfied, grant immunity from prosecution.
Should I reject the Contractual Disclosure Facility offer?
Rejecting the offer should only be considered if you genuinely believe no deliberate fraud was committed. It’s essential to seek specialist advice, as rejecting could lead to a more detailed investigation or criminal charges.
What happens if I do nothing?
If you neither accept nor reject the CDF offer, HMRC will continue investigating, potentially leading to higher penalties or criminal prosecution.
Can I go to prison?
Amid growing pressure, HMRC is intensifying efforts to prosecute tax fraud, which can lead to a custodial sentence. However, accepting the CDF offer for deliberate irregularities provides immunity from prosecution, provided a full and accurate disclosure is made. Engaging specialist advisers is essential to avoid the risk of criminal charges and imprisonment.
Should I appoint an adviser?
Yes, HMRC strongly recommends seeking independent specialist advice before entering into the CDF process. A skilled adviser can guide you through the complexities of the CDF, ensuring your rights are protected and the best possible outcome is achieved.
What penalties are involved?
HMRC states that those who take reasonable care with their returns won’t be penalised, but careless or deliberate errors will incur penalties. For deliberate errors triggered by HMRC, penalties range from 35% to 150% of the unpaid tax, depending on the severity and level of cooperation
Can I make a voluntary disclosure through Contractual Disclosure Facility?
Yes, you can proactively approach HMRC to make a voluntary disclosure under the CDF, which may result in lower penalties compared to disclosures prompted by HMRC action.
How far back can HMRC investigate under the Contractual Disclosure Facility?
HMRC can investigate up to 20 years if deliberate tax fraud is suspected. For less severe cases, the review period is usually up to six years. Accurate disclosure is crucial to avoid further consequences.
Will HMRC tell me what the suspected tax fraud is?
No, HMRC will not disclose the specifics of the suspected fraud. You must review your tax affairs thoroughly and disclose all deliberate errors in your Outline Disclosure form.
What happens if I do not admit to deliberate errors in my tax affairs as part of the Contractual Disclosure Facility?
If you do not admit to deliberate errors, you cannot use the CDF process. HMRC may continue to investigate and could potentially pursue criminal charges if they believe fraud was involved.
What if I have an existing accountant?
If you already have an accountant, it’s important to ensure they have the expertise to handle a CDF case. If not, consider appointing a specialist who can provide the necessary guidance and representation. Many accountants turn to us for their tax enquiry work.
Even if we don't have a prior relationship with your accountant, they are often relieved to have a specialist handle the enquiry, and we will collaborate with them in a way that best meets your needs.
How We Can Help
Tax Dispute Experts are here to provide expert advice and representation throughout the CDF process. Our experienced team can help you make the right decisions, prepare a comprehensive disclosure, and negotiate with HMRC to achieve the best possible outcome. We will:
Conduct a thorough review of your tax affairs, collaborating with you and your current advisers to fully understand the issues and risks involved.
After our review, we’ll develop a strategy to update your affairs efficiently and cost-effectively.
We’ll handle your disclosure to HMRC FIS and represent you in any required meetings, ensuring fair treatment throughout the investigation.
Work to expedite your COP9 investigation for a swift resolution, minimising costs and disruptions.
If you lack the funds to pay your liabilities, we’ll negotiate a manageable payment plan with HMRC to minimise the impact on your personal and business life.
Contact Us
Need assistance with a HMRC’s HMRC Contractual Disclosure Facility? Contact us today to speak with our Tax Dispute Experts and protect your interests.