Forensic Accountants

Should you be subject to a tax enquiry (civil or criminal), benefit fraud, HM Revenue & Customs (HMRC) enquiry, under the guidelines of Code of Practice 8 (COP 8) and Code of Practice 9 (COP 9) for all but not limited to these types of taxes, Corporation Tax, Self-Assessment (partial or all aspects), Value Added Tax (VAT), Pay as You Earn (PAYE) or Construction Industry Scheme (CIS) and benefit frauds or overpayments under the Code of Practice 26 (COP26), then you need a team of skilled professionals such as Zero One Consultants with you on your side to defend your interest. Zero One Consultants is sorry to hear you are subject to a tax enquiry, and we offer our best knowledge and skills to help you out from this situation. We have detailed as much information as you may need to understand what you are going through. Any benefit fraud or benefit overpayments investigation can be daunting, bank-breaking, embarrassing and challenging and can be a name and shame outcome as well. Unfortunately, most benefit frauds reported in the UK are purely an element of jealousy or broken-down relationships or divorces or many other social problems. So even if you are a victim of benefit fraud reporting, this is a hassle you must go through until the law enforcement agencies complete their checks. As mentioned earlier, Zero One Consultants believe in the fact but do not ignore the reality of letters issued under the Code of Practices to Taxpayers for any tax concerns. Once you have received a letter from HM Revenue & Customs (HMRC) for any enquiry or investigation, delaying it, ignoring it, contacting inexperienced or unqualified professionals, window shopping around for a cheap accountant's quote will not help you but will adversely affect you. These matters must be dealt with high sensitivity, extra care, and diligence by knowledgeable, skilled professionals, not by the jack of all trades. Forensic accountancy sciences is a very niche skill. Zero One Consultants have learned over time that there is a spike in the terms such as "Forensic Accountants", "Tax Investigation Specialist", "Professional Opinion Witness", etc. Zero One Consultants must stress not taking the matter lightly and not being the victim of false or fake advertising and marketing tactics. We also must advise selecting your representative wisely. Before you appoint them make sure they are qualified, experienced enough, regulated by HM Revenue & Customs (HMRC) and by their professional regulators for money laundering and financial regulation purposes. Finally, they are insured to do the work for which they are claiming. Unfortunately, this will be time-consuming, frustrating, and expensive if you are in this situation, especially if it turns into Code of Practice 9 (COP 9), but Zero One Consultants can assure you that in this challenging and complex time, Zero One Consultants will be there for you and your assistance.

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Now if you like to read in detail about Benefit Frauds (Benefit Frauds) & Code of Practice 8 (COP 8) & Code of Practice 9 (COP 9)

Forensic Accounts,Tax Investigations

Code of Practice 9 (COP 9)

Tax Loss to HM Revenue & Customs (HMRC)

1.Scope of Code of Practice 9 (COP 9)

The Commissioners of HM Revenue & Customs (HMRC) reserve complete discretion to pursue a criminal investigation with a view, to prosecution where they consider it is necessary and appropriate. In cases where a criminal investigation is not started, the Commissioners of HM Revenue & Customs (HMRC) may decide to investigate using the Code of Practice 9 (COP9) investigation of fraud procedure. Under the investigation of fraud procedure, the recipient (tax payer/suspect) of Code of Practice 9 (COP9) is given the opportunity to make a complete and accurate disclosure of all their deliberate and nondeliberate conducts, irregularities and any inaccuracies in their tax affairs.

Where HM Revenue & Customs (HMRC) suspects that the recipient (tax payer/suspect)’s has failed to make a full disclosure of all irregularities, the Commissioners of HM Revenue & Customs (HMRC) reserve the right to start a criminal investigation to prosecution. The term ‘deliberate conduct’ means that the recipient (tax payer/suspect) knew that an entry or entries included in a tax return and/or accounts were wrong, but the recipient (tax payer/suspect) submitted it/them to HM Revenue & Customs (HMRC) surely believing that HM Revenue & Customs (HMRC) will not find them anyway, or that the recipient (tax payer/suspect) knew that a liability to tax existed at the time of submission but chose not to tell HM Revenue and Customs (HMRC) at the right time.

2. Suspicion of Fraud

HM Revenue & Customs (HMRC) have information that gives HM Revenue & Customs (HMRC) reasons to suspect that the recipient (tax payer/suspect) have committed tax fraud. HM Revenue & Customs (HMRC) will not usually tell recipient (tax payer/suspect) what their suspicions are. It is for the recipient (tax payer/suspect) to decide whether to make a disclosure to HM Revenue & Customs (HMRC) or decide not to. HM Revenue & Customs (HMRC) will keep an open mind to the possibility that there may be an innocent explanation for the suspected fraud. HM Revenue & Customs (HMRC) will treat recipient (tax payer/suspect)’s fairly and politely, and by the law. HM Revenue & Customs (HMRC) will investigate their suspicions, with or without recipient (tax payer/suspect)’s co-operation. If you do not co-operate HM Revenue & Customs (HMRC) may:

Start their investigation which may ultimately be a criminal investigation
Get information about recipient (tax payer/suspect)’s financial and business affairs from third parties
Take formal action including raising assessments for the tax and interest HM Revenue & Customs (HMRC) consider is due
Charge significantly higher penalties
Start legal proceedings to secure some or all of recipient (tax payer/suspect)’s assets
Require a financial security from recipient (tax payer/suspect)’s against certain unpaid taxes and duties

3. Civil to Criminal Investigation

While the Code of Practice 9 (COP 9) investigation, if the recipient (tax payer/suspect) makes materially false or misleading statements, or provides materially false documents, the Commissioners of HM Revenue & Customs (HMRC) reserve the right to start a criminal investigation into that conduct as a separate criminal offence. HM Revenue & Customs (HMRC) issues this Code of Practice 9 (COP 9) in selected cases where HM Revenue & Customs (HMRC) suspects tax fraud. In many cases, HM Revenue & Customs (HMRC) carries out criminal investigations of suspected fraud with a view, to prosecution.

Under this Code of Practice 9 (COP 9), HM Revenue & Customs (HMRC) offers recipient (tax payer/suspect) instead the chance to make a full disclosure under a contractual arrangement called a Contractual Disclosure Facility (CDF).

The following section gives a summary of when HM Revenue & Customs (HMRC) could start a criminal investigation with a view, to prosecution.

a. Rejection

If the recipient (tax payer/suspect) chooses to reject an offer made under the Contractual Disclosure Facility (CDF), then HM Revenue & Customs (HMRC) are not bound by any Contractual Disclosure Facility (CDF) terms. HM Revenue & Customs (HMRC) may start a criminal investigation into any tax fraud they suspect recipient (tax payer/suspect) who might have been involved in.

b. Acceptance Letter but No Outline Disclosure or Make an Invalid Outline Disclosure

If the recipient (tax payer/suspect) fails to make a valid Outline Disclosure, either by not sending in an Outline Disclosure or failing to complete it correctly, the recipient (tax payer/suspect) will not have carried out their responsibilities under the Contractual Disclosure Facility (CDF). HM Revenue & Customs (HMRC) will not then be bound to observe our side of the contract, and we may start a criminal investigation into any suspected tax frauds.

c. Incomplete Outline Disclosure

Where recipient (tax payer/suspect) Outline Disclosure does not disclose all tax, losses brought by your deliberate conduct, then HM Revenue & Customs (HMRC) may start a criminal investigation into any deliberate conduct that recipient (tax payer/suspect) have not disclosed. In these circumstances, the criminal investigation will be limited to the deliberate conduct recipient (tax payer/suspect) have not disclosed, the deliberate conduct on your Outline Disclosure will not be subject to criminal investigation by us.

d. Making a False Statement

Where HM Revenue & Customs (HMRC) believe that the recipient (tax payer/suspect) may make a false statement or you have submitted false documents during the investigation, HM Revenue & Customs (HMRC) may start a criminal investigation into the false statement or document itself.

e. False Formal Disclosure Documents

Where HM Revenue & Customs (HMRC) believes the Disclosure Report, Certificate of Full Disclosure, statement of assets and liabilities or the certificates of bank and credit card accounts operated are incorrect or incomplete, HM Revenue & Customs (HMRC) reserve the right to start a criminal investigation into the submission of those false documents.

4. Contractual Disclosure Facility (CDF)

The Contractual Disclosure Facility (CDF) offers recipient (tax payer/suspect) the chance to disclose any loss of tax that has been brought to HM Revenue & Customs (HMRC) by the recipient (tax payer/suspect) by deliberate conduct (HM Revenue & Customs (HMRC’s belief). This is a contract made between the HM Revenue & Customs (HMRC) and the recipient (tax payer/suspect) of Code of Practice 9 (COP 9). In the agreement, the recipient (tax payer/suspect) will enter if he/she agrees with HM Revenue & Customs (HMRC) notice of Code of Practice 9 (COP 9).

HM Revenue & Customs (HMRC) will keep an open mind to the possibility that there may be an innocent explanation for the suspected fraud, and HM Revenue & Customs (HMRC) will treat recipient’s (tax payer/suspect) fairly and politely, and in accordance with the law. HM Revenue & Customs (HMRC) will investigate their suspicions, with or without recipient’s (tax payer) co-operation.

Remember this offer expires 60 days after the recipient (tax payer/suspect) receives HM Revenue & Customs (HMRC) letter making the offer of Code of Practice 9 (COP9). Recipient (tax payer/suspect) has 60 days to respond once an offer is made. If the recipient (tax payer/suspect) makes a full disclosure of your deliberate conduct, HM Revenue & Customs (HMRC) will not pursue a criminal investigation with a view, to prosecution. HM Revenue & Customs (HMRC) expects you to stop any deliberate conduct that has led or may lead to a future tax loss immediately. A specially trained authorised officer will handle the Code of Practice 9 (COP 9) investigation into your tax affairs, and recipient (tax payer/suspect) will be given a named contact.

5. Offer to Contractual Disclosure Facility (CDF)

In a case that HM Revenue & Customs (HMRC) think that it is suitable for the recipient (tax payer/suspect) to be dealt with under a Contractual Disclosure Facility (CDF) HM Revenue & Customs (HMRC) will make a formal offer. HM Revenue & Customs (HMRC) offer and recipient (tax payer/suspect)’s acceptance of it, within 60 days, create the contractual arrangement between us. This gives you the assurance that you will not be criminally investigated for the irregularities in your tax affairs that you have disclosed under the terms of the Contractual Disclosure Facility (CDF). A valid Contractual Disclosure Facility (CDF) arrangement can only be made by you accepting the standard offer HM Revenue & Customs (HMRC) have made. HM Revenue & Customs (HMRC) will not make an offer on any other terms. The Contractual Disclosure Facility (CDF) terms are not binding on either party unless HM Revenue & Customs (HMRC) receive recipient (tax payer/suspect)’s acceptance. A standard acceptance letter is attached to the Contractual Disclosure Facility (CDF) offer. Recipient (tax payer/suspect) just needs to sign, date and return it.

6. Recipient (tax payer/suspect)’s (tax payer/suspect) Options,Code of Practice 9 (COP 9)

Recipient (tax payer/suspect) will make a full disclosure of all tax irregularities under the terms of the Contractual Disclosure Facility (CDF). To comply with recipient (tax payer/suspect)’s part of the contract, in agreement with Contractual Disclosure Facility (CDF), the recipient (tax payer/suspect) needs to complete the 2 stage disclosures:

a. Outline Disclosure

A valid Outline Disclosure of the deliberate conduct that brought about a loss of tax. Recipient (tax payer/suspect) must make a valid Outline Disclosure within 60 days of the date recipient (tax payer/suspect) receives HM Revenue & Customs (HMRC) offer (this is the same date as the time given for you to decide whether to accept our offer starting from the date you receive HM Revenue & Customs’ (HMRC) offer letter.

b. Formal Disclosure

A certified statement that recipient (tax payer/suspect) has made a full, complete and accurate disclosure of all tax irregularities together with certified statements of recipient (tax payer/suspect) assets and liabilities, and of all bank accounts and credit cards recipient (tax payer/suspect) have operated. Where the tax loss from the recipient (tax payer/suspect) deliberate conduct is self-contained and easily quantified, there may be nothing else for the recipient (tax payer/suspect) to do following recipient (tax payer/suspect) Outline Disclosure. Recipient (tax payer/suspect) will need to agree what they owe to HM Revenue & Customs (HMRC), arrange payment and certify that recipient (tax payer/suspect) have disclosed all irregularities. This is recipient (tax payer/suspect)’s Formal Disclosure. In most cases, much more work will be necessary before recipient (tax payer/suspect) will be able to make their Formal Disclosure. HM Revenue & Customs (HMRC) will expect you to prepare a Disclosure Report, as this is the best way to ensure that this work is done properly.

This is the only way that recipient (tax payer/suspect) can be certain that HM Revenue & Customs (HMRC) will not carry out a criminal investigation into the tax frauds they suspect.

The Contractual Disclosure Facility (CDF) is only suitable for you if you:

i. Have brought about a loss of tax through your deliberate conduct
ii. Wish to fully disclose the loss of tax, that you have brought about through your deliberate Conduct
iii. Will work with us to put your tax affairs in order including paying any tax, interest and penalty that you owe
iv. Stop any continuing deliberate conduct immediately

➢In exchange for your full disclosure of all irregularities, we will not pursue a criminal investigation into the conduct you disclose.
➢The Contractual Disclosure Facility (CDF) is not appropriate for people who want to disclose only careless errors or mistakes.

7. Effects of Entering (signing) Contractual Disclosure Facility (CDF)

To comply with the terms of the contract, the recipient (tax payer/suspect) will be admitting that the tax has been lost because of the recipient (tax payer/suspect) deliberate conduct. This means HM Revenue & Customs (HMRC) may be able to seek recovery of the tax, interest and associated penalties you may have evaded for as far back as 20 years. If the recipient (tax payer/suspect) enters a Contractual Disclosure Facility (CDF), HM Revenue & Customs (HMRC) expects you to co-operate fully with them. Full co-operation is the only element that may/will ensure that recipient (tax payer/suspect) achieves the greatest possible reductions for any penalty that may be due. More information on HM Revenue & Custom’s (HMRC) penalty regimes visits HM Revenue & Customs (HMRC) Penalties.

If the recipient (tax payer/suspect)'s co-operated fully with our investigation, you will achieve a greater reduction in any penalty found to be due. You may also be able to avoid other civil sanctions such as insolvency and, in some cases, the publication of your name and details. You must read this Code of Practice carefully and discuss it with your tax adviser if you have one. You must keep all existing records, including any computer records, during our investigation whether you need to do so by law. We may ask to see your business and private financial records. The Code of Practice 9 (COP 9) applies to all tax losses brought by your deliberate conduct. HM Revenue & Customs (HMRC) has a complete authority when can HM Revenue & Customs (HMRC) publish details of deliberate defaulters and how they may need to monitor your tax affairs more closely under our Managing Serious Defaulters Programme (MSDP).

➢Making your Formal Disclosure does not signify the end of our investigation, but it does mean you have complied with the terms of the Contractual Disclosure Facility (CDF).

8. Rejection Route

If the recipient (tax payer/suspect) does not believe that they have brought about a loss of tax through their deliberate conduct. Recipient (tax payer/suspect) can sign and return the Contractual Disclosure Facility (CDF) Rejection Letter, within the same 60-day period. HM Revenue & Customs (HMRC) is happy to consider any explanations or documents that support recipient (tax payer/suspect) rejection of Contractual Disclosure Facility (CDF) letter. Recipient (tax payer/suspect) should only choose the rejection route if they genuinely believe that they have not brought about a loss of tax through their deliberate conduct. If the recipient (tax payer/suspect) signs the Rejection Letter, HM Revenue & Customs (HMRC) will start their investigation which can/may be a criminal investigation. Your Rejection Letter may also be used in court or tribunal proceedings as evidence.

If HM Revenue & Customs (HMRC) decided to proceed with a civil investigation in response to your rejection of their offer, HM Revenue & Customs (HMRC) reserve the right to escalate the case to a criminal investigation at a later date if we consider it is appropriate. If HM Revenue & Customs (HMRC) have not heard from recipient (tax payer/suspect) within 60 days after recipient (tax payer/suspect) receives HM Revenue & Customs (HMRC) offer letter then HM Revenue & Customs (HMRC) will treat this as a conscious decision, not to accept our offer. HM Revenue & Customs (HMRC) will begin a criminal or a civil investigation into the tax fraud when they suspect recipient (tax payer/suspect) has committed. If the recipient (tax payer/suspect) has brought about a loss of tax through their deliberate conduct, but they deny it, this may result in a criminal investigation. This may lead to prosecution, or significantly higher civil financial penalties, and the potential publication of recipient’s (tax payer/suspect) details.

HM Revenue & Customs (HMRC) may use their statutory information powers if necessary and may approach third parties for information. If the recipient (tax payer/suspect) engages and co-operates fully with HM Revenue & Customs (HMRC), they may not need to use their formal powers. If irregularities are discovered, HM Revenue & Customs (HMRC) will take formal action against recipient (tax payer/suspect) including the issue of assessments, and will pursue collection of any unpaid taxes and interest. Recipient (tax payer/suspect) will also have lost the opportunity to earn the greatest possible reduction of any penalty that recipient (tax payer/suspect) owes. Where HM Revenue & Customs (HMRC) verify and accept recipient’s (tax payer/suspect) rejection of the Contractual Disclosure Facility (CDF), HM Revenue & Customs (HMRC) will issue a confirmation that they no longer suspect recipient (tax payer/suspect) of tax fraud.

9. Appointing an Agent or Qualified Adviser

HM Revenue & Customs (HMRC) strongly advise recipient (tax payer/suspect) of Code of Practice 9 (COP 9) letter to seek independent professional advice. Recipient (tax payer/suspect) may already have an appointed adviser if so, then recipient (tax payer/suspect) should contact them immediately. However, many people find it helpful to appoint a specialist adviser who is familiar with Code of Practice 9 (COP 9), as well as their regular adviser. If you want HM Revenue & Customs (HMRC) to deal directly with your adviser on all matters covered by the Code of Practice 9 (COP 9), the recipient (tax payer/suspect) must make sure that they have given HM Revenue & Customs (HMRC) full authority to do so.

Recipient (tax payer/suspect) can use either form 64-8, ‘Authorising your agent’ or from Comp1, ‘Compliance checks: temporary authorization to allow HM Revenue & Customs (HMRC) to deal with recipient (tax payer/suspect)’s tax adviser to do this, making sure that recipient (tax payer/suspect)’s authority covers all taxes and duties. Alternatively, the recipient (tax payer/suspect) can fill out the agent details box on the Outline Disclosure form. Recipient (tax payer/suspect) are personally responsible for their tax affairs and the accuracy of the information supplied to HM Revenue & Customs (HMRC), and so recipient (tax payer/suspect) must give your adviser all the facts. We expect high standards from your appointed adviser. While we will normally deal with them directly if there are any delays or problems HM Revenue & Customs (HMRC) will contact recipient (tax payer/suspect).

➢Any costs that you incur for our enquiries cannot normally be claimed as an expense against tax.