Code of Practice 9 / HMRC Fraud Investigation Advice

Specialist advice for taxpayers facing HMRC Code of Practice 9 investigations and Contractual Disclosure Facility decisions

Receipt of a Code of Practice 9 letter indicates that HMRC suspects serious tax fraud and is offering the taxpayer the opportunity to make a full disclosure under the Contractual Disclosure Facility.

The decision whether and how to respond is critical.

A mishandled response may materially worsen the taxpayer’s position and can have significant tax, penalty and potential criminal consequences.

When Advice Is Commonly Required

Advice is commonly sought where:

  • HMRC has issued a Code of Practice 9 letter

  • the taxpayer is considering whether to accept the Contractual Disclosure Facility

  • historic tax irregularities require analysis before disclosure

  • the taxpayer disputes HMRC’s assumptions or allegations

  • substantial penalties or settlement negotiations are anticipated

  • litigation may ultimately be required

My Approach

I advise on Code of Practice 9 matters from a litigation and strategic perspective.

This includes advising on:

  • whether the Contractual Disclosure Facility should be accepted

  • scope and framing of disclosures

  • management of legal and evidential risk

  • penalty and behavioural issues

  • strategic engagement with HMRC throughout the investigation

  • preparation for subsequent appeals or litigation where required

Why Clients and Accountants Instruct Me

I act in complex HMRC disputes involving allegations of deliberate conduct, tax fraud, offshore issues, Schedule 36 powers and Code of Practice 9 investigations. I have deep experience of being instructed by often self-made UHNW entrepreneurs and disruptive businesses in the technology, telecommunications, hospitality, and real estate sectors, including cross-border trading enterprises.

My practice combines:

  • specialist tax litigation expertise

  • judicial review and public law experience involving HMRC

  • experience in quasi-criminal tax disputes

  • and coordinated strategic engagement alongside accountants, leading Counsel, international tax experts and other professional advisers.

I am instructed by entrepreneurs, businesses, accounting firms and internationally mobile taxpayers in matters involving significant financial, professional and reputational risk.

Michael Paulin is a specialist tax barrister at 1 Crown Office Row practising in tax litigation, HMRC disputes, judicial review and employment-related tax matters. He has acted in Schedule 36 litigation, COP9 disputes and judicial review challenges involving HMRC investigatory powers. He has written on COP9 for Tax Journal.

HMRC Information Notices and Schedule 36 Powers

HMRC frequently deploys formal information powers during investigations, including notices issues under Schedule 36 Finance Act 2008.

The strategic handling of such notices can materially affect the course of an investigation.

Advice may include:

  • whether HMRC’s requests fall within the statutory scope of Schedule 36

  • whether the notice is appealable and/or whether the information is reasonably required

  • strategic considerations before complying, appealing, or engaging further, including how best to protect the taxpayer’s business interests

  • wider public law or procedural arguments where HMRC has exceeded its powers

I have acted successfully in litigation concerning HMRC’s use of Schedule 36 information powers, including appeals arising in the context of remuneration trust enquiries.

In R D Utilities Ltd v HMRC [2014] UKFTT 303 (TC), I successfully challenged HMRC’s use of a Schedule 36 information notice where the Tribunal held that the information sought had not been lawfully requested in the form demanded and set aside the relevant parts of the notice.  

COP9 investigations frequently require coordinated strategic engagement involving Counsel, accountants and other professional advisers. In many cases, maintaining a unified and carefully managed approach from the outset can be critical where allegations of deliberate conduct, tax fraud or concealment are in issue. The interaction between civil investigation procedures, disclosure obligations and potential criminal exposure often requires careful judgment concerning both substance and strategy.

It is also important to recognise that professional advisers themselves may face significant regulatory and professional risks where allegations of deliberate tax behaviour arise. The wider legislative and regulatory framework, including obligations arising under the Criminal Finances Act 2017, has materially increased the seriousness with which businesses and advisers must approach allegations of tax evasion and associated conduct. Early specialist contentious advice can therefore assist in ensuring that communications and engagement with HMRC are approached carefully, proportionately and strategically.

Whilst COP9 remains a civil contractual disclosure process, it is important to understand that HMRC retains criminal investigation and prosecution powers in serious cases involving alleged dishonesty, concealment or fraudulent conduct. HMRC does, in appropriate circumstances, pursue criminal prosecutions concerning tax fraud and related offences. Careful strategic handling at an early stage may therefore be of considerable importance, both in managing risk and in seeking to avoid unnecessary escalation.

Experience shows that taxpayers frequently arrive at COP9 investigations after having relied upon arrangements, structures or advice that later become the subject of challenge. Even in circumstances where HMRC raises serious allegations, there may nevertheless remain important procedural, evidential and substantive issues requiring careful analysis. Taking stock of matters at an early stage, ensuring coordinated engagement between Counsel and the relevant professional advisers, and maintaining a coherent strategic approach can often materially improve the conduct and management of the dispute.

Common Situations

Advice is commonly sought where:

  • offshore income or structures are under scrutiny

  • historic planning arrangements are challenged

  • accountants or adviser require litigation support and the protective umbrella of legal professional privilege

  • HMRC alleges deliberate conduct or concealment

  • Schedule 36 notices have been issued

  • Criminal exposure and liability is a concern

  • Business partners are in, or may be, in conflict

Why Specialist Advice Is Required

Code of Practice 9 investigations are not routine enquiries.

They involve allegations of deliberate conduct and frequently determine:

  • the taxpayer’s civil liability

  • the scale of penalties imposed

  • whether HMRC maintains or escalates allegations of fraud

  • whether settlement is achievable on acceptable terms

Strategic decisions taken at the outset often shape the entire course of the investigation.

Fixed-fee strategic advice is available where appropriate for suitable matters.

Enquiries

Enquiries may be made using the contact form below.