What happens if I reject the CDF?

If you reject the CDF, HMRC may pursue a criminal investigation, with the risk of prosecution and imprisonment. HMRC will also conduct a civil investigation and assess the tax, interest, and penalties. Rejecting the CDF is high-risk and should only be done with specialist legal advice. If the taxpayer rejects the CDF, the consequences can be severe: (1) Criminal investigation — HMRC may pursue a criminal investigation, with the aim of prosecuting the taxpayer for tax fraud. Criminal prosecution can result in imprisonment (up to 7 years for tax evasion), confiscation of assets, and a criminal record. (2) Civil investigation — HMRC will also conduct a civil investigation, assessing the tax due (up to 20 years for deliberate behaviour), interest, and penalties (up to 100% of the additional tax for deliberate and concealed behaviour). (3) No immunity — the taxpayer does not receive immunity from prosecution. (4) Risk — the risk of criminal prosecution is significant, especially if HMRC has strong evidence. (5) Why reject? — the taxpayer might reject the CDF if they believe they have not committed tax fraud, if the evidence is weak, or if they want to challenge HMRC's allegations. However, this is high-risk and should only be done with specialist legal advice. In most cases, accepting the CDF (if the taxpayer has committed tax fraud) is the safer option, as it provides immunity from prosecution and a structured process for settlement. Rejecting the CDF should be a carefully considered decision, made with the benefit of specialist legal and tax advice. Relevant legislation: COP9 (rejection of CDF); Criminal Justice Act 1987 (criminal prosecution); TMA 1970 (civil assessment provisions). Example: A taxpayer rejects the CDF, believing they have not committed tax fraud. HMRC pursues a criminal investigation and, with strong evidence, prosecutes the taxpayer. The taxpayer is found guilty of tax evasion and sentenced to 3 years imprisonment, with confiscation of assets. If they had accepted the CDF and made a full disclosure, they would have avoided prosecution. Common mistake: Rejecting the CDF without specialist legal advice. The consequences of rejection (criminal prosecution risk) are severe, and the decision should only be made after careful consideration with an experienced lawyer.

How long does a COP9 investigation take?

A COP9 investigation can take 1-2 years or more. The 60-day decision period is followed by a detailed disclosure period (typically 6 months), then quantification and settlement. The timeline depends on the complexity and the taxpayer's cooperation. A COP9 investigation can take a significant amount of time: (1) 60-day decision — the taxpayer has 60 days from the date of the COP9 letter to decide whether to accept the CDF. (2) Outline disclosure — if the CDF is accepted, the taxpayer provides an outline disclosure of the tax irregularities within 60 days. (3) Detailed disclosure — the taxpayer has a further period (typically 6 months) to provide a detailed disclosure with quantification of the tax irregularities. (4) Meeting — HMRC may request a meeting to discuss the disclosure and clarify the details. (5) Quantification — HMRC reviews the disclosure and quantifies the tax, interest, and penalties. This can take several months. (6) Settlement — the taxpayer and HMRC negotiate a settlement (tax, interest, and penalties). (7) Payment — the taxpayer pays the agreed amount. The total timeline can be 1-2 years or more, depending on the complexity of the taxpayer's affairs, the volume of irregularities, and the taxpayer's cooperation. To minimise the timeline, the taxpayer should: (a) accept the CDF promptly, (b) make a full and complete disclosure as quickly as possible, (c) cooperate with HMRC's information requests, (d) engage specialist advisers to manage the process. Relevant legislation: COP9 (timeline and process); FA 2007, Schedule 24 (penalties). Example: A taxpayer receives a COP9 letter in January 2026. They accept the CDF in February 2026 (within 60 days). They provide an outline disclosure in February 2026 and a detailed disclosure in August 2026 (6 months later). HMRC quantifies the tax by December 2026, and a settlement is reached in March 2027. Total timeline: approximately 14 months. Common mistake: Underestimating the time required for the disclosure. The detailed disclosure involves quantifying tax irregularities over many years, which can take months of work. Starting early and engaging specialist advisers is essential.

Do I need a lawyer for a COP9 investigation?

Yes. A COP9 investigation carries criminal prosecution risk, and the CDF decision is critical. You need both a specialist tax lawyer (for legal advice and privilege) and a tax adviser (for the technical disclosure). Do not attempt to handle a COP9 investigation alone. A COP9 investigation is the most serious HMRC civil investigation, and specialist representation is essential: (1) Specialist tax lawyer — the taxpayer needs a lawyer experienced in COP9 investigations and tax fraud. The lawyer provides: (a) Legal advice on whether to accept the CDF. (b) Legal privilege — communications between the taxpayer and a lawyer are legally privileged, meaning they cannot be disclosed to HMRC. This allows the taxpayer to be fully transparent with their lawyer without fear of the information being used against them. (c) Protection of the taxpayer's legal rights throughout the investigation. (d) Negotiation with HMRC. (2) Tax adviser — the taxpayer also needs a tax adviser (often an accountant) to: (a) Prepare the detailed disclosure of tax irregularities. (b) Quantify the tax, interest, and penalties. (c) Manage the settlement process. (3) Do not handle alone — attempting to handle a COP9 investigation without specialist representation is extremely risky. The consequences of making a mistake (e.g., failing to disclose all irregularities, rejecting the CDF when it should have been accepted) can be life-changing, including criminal prosecution and imprisonment. The taxpayer should engage specialist advisers immediately upon receiving the COP9 letter, to ensure the 60-day decision period is used effectively. Relevant legislation: Legal Professional Privilege (common law); COP9 (specialist representation); Solicitors Act 1974 (legal representation). Example: A taxpayer receives a COP9 letter. They immediately engage a specialist tax lawyer and a tax adviser. The lawyer provides legal advice on accepting the CDF and ensures legal privilege over the taxpayer's communications. The tax adviser prepares the detailed disclosure and quantifies the tax. The team negotiates a settlement with HMRC, achieving immunity from prosecution and a fair settlement. Common mistake: Attempting to handle a COP9 investigation without a lawyer. Legal privilege is only available through a lawyer, and without it, the taxpayer's communications with their adviser may be disclosable to HMRC. The lawyer is essential for protecting the taxpayer's legal rights.

Tax Disputes › Investigations

Code of Practice 9 (COP9) & the CDF

COP9 is used when HMRC suspects serious tax fraud. The Contractual Disclosure Facility (CDF) offers immunity from prosecution in exchange for full disclosure. Understand the process and how to protect yourself.

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Code of Practice 9 (COP9) is the most serious HMRC civil investigation procedure, used when HMRC suspects serious tax fraud. Unlike COP8 (tax avoidance), COP9 carries the risk of criminal prosecution. However, HMRC offers the Contractual Disclosure Facility (CDF) — if the taxpayer makes a full and complete disclosure of all tax irregularities, HMRC will not pursue criminal prosecution. The taxpayer must decide whether to accept the CDF within 60 days. Understanding the COP9 process and having specialist representation is essential for protecting the taxpayer's interests.

When COP9 Applies

COP9 is used when HMRC suspects serious tax fraud — the deliberate and dishonest evasion of tax. This includes: deliberately omitting income from tax returns, using false invoices, offshore tax evasion, and VAT fraud. COP9 is a civil investigation with criminal prosecution risk. The CDF is offered as an alternative to criminal prosecution.

The Contractual Disclosure Facility (CDF)

The CDF is HMRC's offer of immunity from criminal prosecution in exchange for a full and complete disclosure of all tax irregularities. The taxpayer must: (1) Accept the CDF within 60 days. (2) Make a full and complete disclosure of all tax irregularities (not just those HMRC has identified). (3) Cooperate with HMRC to quantify the tax due. (4) Pay the tax, interest, and penalties. If the taxpayer accepts and complies, HMRC will not pursue criminal prosecution (for the disclosed irregularities). If the taxpayer rejects the CDF or does not make a full disclosure, HMRC may pursue a criminal investigation.

The 60-Day Decision

The taxpayer has 60 days from the date of the COP9 letter to decide whether to accept the CDF. This is a critical decision: (1) Accept — the taxpayer makes a full disclosure and receives immunity from prosecution. (2) Reject — HMRC may pursue a criminal investigation, with the risk of prosecution and imprisonment. (3) The decision should be made with specialist legal and tax advice. The 60-day period is short, and the taxpayer should seek advice immediately.

The Disclosure Process

If the taxpayer accepts the CDF, the disclosure process involves: (1) Outline disclosure — within 60 days, the taxpayer provides an outline of the tax irregularities. (2) Detailed disclosure — within a further period (typically 6 months), the taxpayer provides a detailed disclosure with quantification. (3) Meeting — HMRC may request a meeting to discuss the disclosure. (4) Settlement — HMRC quantifies the tax, interest, and penalties, and a settlement is reached. (5) Payment — the taxpayer pays the tax, interest, and penalties. The process can take 1-2 years to complete.

Key Points

What You Need to Know

COP9 is used when HMRC suspects serious tax fraud
The CDF offers immunity from criminal prosecution in exchange for full disclosure
The taxpayer has 60 days to accept or reject the CDF
If the CDF is rejected, HMRC may pursue a criminal investigation
Specialist legal and tax advice is essential from the outset

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HMRC Self-Assessment Enquiries Code of Practice 8 (COP8)Code of Practice 9 (COP9)HMRC Penalties Statutory Reviews of HMRC Decisions First-tier Tribunal (Tax Chamber)Alternative Dispute Resolution (ADR)Worldwide Disclosure Facility (WDF)HMRC Nudge Letters HMRC Offshore Disclosure Campaigns HMRC Discovery Assessments HMRC Information Notices Corporate Criminal Offence: Failure to Prevent Tax Facilitation VAT Disputes & Tribunals IR35 & Off-Payroll Working Disputes Transfer Pricing Disputes

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