What is the CDF?
If HMRC suspect a taxpayer has been involved in tax fraud, they will initial view an investigation from a criminal perspective. If HMRC decides that criminal prosecution will not be pursued, they will investigate on a civil basis by issuing Code of Practice 9 and will offer a contract through the Contractual Disclosure Facility (CDF).
We would always advise that you immediately seek professional advice if you receive notification of a Code of Practice 9 investigation.
The CDF may also be offered to a taxpayer who wishes to make a voluntary disclosure of tax fraud. The CDF is not appropriate for people who want to disclose only careless errors, mistakes, or the existence and participation in avoidance arrangements.
What are your options?
The CDF is a process which both the taxpayer and HMRC sign up to. If HMRC offer the CDF, the taxpayer will have 60 days to respond. The options at this stage are to:
- admit to the fraud and submit an Outline Disclosure
- make a formal denial
- refuse to respond
If you enter into the CDF, HMRC will agree not to criminally investigate you over the fraud that you disclose. If you chose to make a denial or not to respond, HMRC will be free to launch an criminal investigation into your tax affairs at any time. It is therefore essential that all the relevant facts are established before choosing a route.
The key terms of the CDF
If you enter into the CDF you will be signing up to a contract with HMRC. Under this contract you will be agreeing to:
- provide details of all tax that has been deliberately evaded
- submit a detailed report of the tax fraud in more complicated cases
- discontinue the tax fraud
- pay all taxes due in addition to interest for late payment and penalties due
- provide a certified statement of all personal assets and liabilities
- sign a Certificate of Full Disclosure, stating that you have provided all details of the fraud
What happens after the CDF?
HMRC will seek a change in the behaviour of the taxpayer which may be monitored for a period of time going forwards through the Managing Deliberate Defaulters programme.
To get more information on the Contractual Disclosure Facility in a printable format, download our Factsheet.
If you wish to discuss this or any other matter with a member of the team, please contact us.