COP9 tax investigations explained

If you are advising a client whose affairs fall under HM Revenue & Customs’ (HMRC) highest level of scrutiny (or if HMRC has approached you directly), then a Code of Practice 9 (COP9) tax investigation may be a part of HMRC’s approach.

The process is sometimes also referred to as the Contractual Disclosure Facility (CDF).

A COP9 enquiry reflects suspicion of deliberate tax fraud and carries the highest stakes: an allegation of criminal behaviour, punitive penalties and reputational damage.

But at the same time, COP9 offers a structured “disclosure window” that will provide protection against a criminal investigation.

This article unpacks COP9 HMRC investigations in terms of process and considerations.

What is COP9? – Legal basis and HMRC policy

COP9 is HMRC’s procedural code for civil investigation of suspected tax fraud, offering taxpayers the opportunity to make a full, accurate, open and honest disclosure in return for immunity from criminal prosecution for disclosed matters.

It is a civil route, distinct from criminal investigation, though HMRC reserves the right to convert to a criminal process in certain circumstances (e.g. false statements).

COP9 is not itself legislation, it is an HMRC administrative code (a policy instrument) set out in HMRC’s published “Code of Practice 9” booklet.

The ability to convert to criminal investigation acts as a constraint on abuse of the process.

COP9 applies to all taxes, duties, levies and contributions administered by HMRC whenever HMRC suspects deliberate behaviour that has given rise to a loss.

When HMRC uses COP9 (vs other routes)

Some red flags that tend to trigger COP9 enquiries include:

• Concealment of income or inflation of expenses
• Use of offshore structures, undeclared foreign income, trusts to evade tax
• Fabricated invoices, sham entities, false documentation
• Persistent non-disclosure or repeated adjustment of returns
• Intelligence or third-party data suggesting deliberate concealment or evasion

Using COP9 allows HMRC to secure disclosure and settlement more efficiently in many cases compared to the cost of a criminal investigation and prosecution.

HMRC’s 2024/25 data show that many suspected fraud cases are handled via COP9 rather than full criminal investigation.

However, HMRC can remove COP9 and start a criminal investigation if cooperation is not fully given.

If during the COP9 process HMRC determines that disclosures are materially false, incomplete or that new evidence suggests more serious and undisclosed wrongdoing, it may withdraw the CDF and initiate criminal proceedings.

The COP9 tax investigations process

Below is a technical breakdown of how COP9 tax investigations proceed, with notes on timing, obligations, and risks. HMRC is clear in its guidance that COP9 matters should only be handled by those with expertise in that area.

Opening and the 60-day window

When HMRC opens a COP9 process, it issues a formal letter offering the CDF route and attaches the COP9 booklet and an Outline Disclosure form.

From the date of the offer, the taxpayer has 60 days to respond by a) accepting the CDF and delivering a valid Outline Disclosure, or b) rejecting the offer.

Failure to respond is treated as a rejection.

If rejected (or no response), HMRC may proceed as if no contractual constraint exists (i.e. full civil or criminal investigation).

Outline disclosure

If the offer is accepted, the taxpayer (or via adviser) must submit an Outline Disclosure.

This is an initial narrative statement of deliberate conduct, outlining:

• What was done and how, by whom
• Time periods over which deliberate conduct occurred
• Identity of any entities, intermediaries or nominees used
• How the conduct gave rise to tax/duty loss
• Any estimates, and assumptions used
• Identification of non-deliberate errors or omissions (if known)
• Available supporting documents and records

The Outline Disclosure need not be perfect in every figure if all details are not immediately known but must be honest and made in good faith.

The taxpayer should indicate where estimates are used and preserve any ancillary records.

Formal disclosure / Disclosure Report

After the Outline Disclosure, HMRC and the taxpayer (via adviser) will agree the scope of the Disclosure Report. This scoping meeting will usually happen after an opening meeting between the taxpayer, adviser and HMRC.

The disclosure report is a full, forensic document that:

• Quantifies each irregularity, how it was calculated and reconciled
• Provides a certified statement of assets and liabilities
• Lists all bank accounts, credit cards and similar instruments
• Reconciles disclosed irregularities with known or suspected HMRC intelligence
• Demonstrates that no material disclosure has been omitted
• Includes certificates of disclosure and statements of completeness

In complex cases, HMRC may require interim drafts, progress meetings, further clarifications, or extension of submissions.

Although some aspects of the process of COP9 appear intrusive or labour intensive, COP9 is far less stressful and costly than responding to a criminal investigation.

Meetings, information powers and third-party enquiries

Throughout the COP9 process, HMRC may:

• Invite meetings at opening, mid-stage, and closing (attendance is voluntary but viewed favourably)
• Issue notices under statutory powers (e.g. Finance Act information notices, notices to third parties such as banks, suppliers)
• Require security (e.g. bank guarantees) or assurances in cases of high risk
• Use legal powers to compel documents or information if cooperation is poor or delays arise

Failure to comply with notices, or refusal to respond, may lead to formal information notices and/or escalation of the investigation

Full and timely cooperation with the process will ensure that penalties are kept to the lowest level possible.

Key tactical and technical considerations

Below are some advanced points any adviser must consider when assisting clients facing or likely facing COP9 tax investigations.

Scope definition and limitation issues

One of the first tasks is to negotiate (with HMRC) a well-defined scope of disclosure and limit creep.

It is important to agree with HMRC the years, taxes, entities and transactions within scope.

If the scope becomes open-ended, the burden and cost escalate dramatically.

However, a disclosure must be complete and include all issues that have caused a loss of tax.

It is important to balance a well-defined scope with the need to be transparent.

Sometimes a taxpayer can feel uncomfortable telling their accountant about aspects of their business that they have hidden or lied about, this is one area where an independent expert can add significant value.

How far back can a tax investigation go?

Although normal time limits (e.g. four or six years) apply to many assessments, once a taxpayer accepts deliberate conduct (or HMRC proves it), HMRC can assess back up to 20 years in serious fraud cases.

You should carefully map out which periods are genuinely at risk, and where earlier years are speculative or de minimis.

Treatment of deliberate vs careless errors

A central technical distinction is between deliberate behaviour and careless or inadvertent error.

COP9 is only available when deliberate conduct is admitted or is credible from the facts.

During the process, other aspects of a business are often considered and checked, and any inadvertent errors identified must be disclosed also, if they happened within a time period that HMRC would be able to assess.

In the Outline/Disclosure documents, the adviser must explicitly address each irregularity and explain why it is deliberate (or whether some are non-deliberate).

Our recommendations

In advising clients on COP9 tax investigations, the adviser’s role is to guide scope, ensure factual robustness, manage disclosure strategy, negotiate with HMRC, and structure payment and security.

For anything other than a very simple disclosure, it is important that the adviser has experience of dealing with these high-stakes HMRC interactions.

We often work hand-in-hand with accountants and their clients in this situation, ensuring that the process is handled in a way that does not expose any party to a risk of escalation.

We will work with both you and your client to ensure that the best course of action is taken and that we put forward the best argument to HMRC.

You can get in touch with our friendly and experienced team on: 0203 675 8122 or email jeremy.johnson@intaxltd.com.

inTAX is a specialist tax disputes firm. We deal with disclosures, investigations, and tax enquiries of all descriptions, including COP9, fraud investigations, VAT fraud, tax avoidance, let property disclosures and tribunal appeals. However, we don’t just deal with the serious end of tax investigations; we are also happy to handle smaller enquiries, disputes and problems that can be equally as worrying for our clients.