Code of Practice 9: CDF Decision, Disclosure, and Penalties

Code of Practice 9 is the civil procedure HMRC’s Fraud Investigation Service uses when it suspects you of serious, deliberate tax fraud. Instead of going straight to a criminal investigation, HMRC offers you a contract: admit the deliberate behavior, disclose everything, and pay the tax, interest, and penalties owed, and in return HMRC will not prosecute you for the conduct you disclose.¹ You have 60 days from the offer to decide, and the decision shapes everything that follows.

Why HMRC Sent You a COP9 Letter

The Fraud Investigation Service does not issue COP9 speculatively. It picks cases where it already holds information giving rise to a suspicion of tax fraud, drawn from data-matching, third-party intelligence, suspicious activity reports from banks, or patterns in your filed returns.¹ HMRC’s published policy is to use COP9 rather than criminal investigation wherever it considers a civil route appropriate.²

Receiving the letter does not mean HMRC has proven anything. It means investigators believe there is enough evidence to warrant a full examination, and they are offering you a way through it. The letter arrives with an offer to enter the Contractual Disclosure Facility, and the clock starts running the day you receive it.

The 60-Day Decision: Accept or Reject the CDF

The Contractual Disclosure Facility (CDF) is the mechanism at the heart of COP9. It is a formal contract: you agree to make a complete, honest disclosure of all deliberate behavior that caused a loss of tax, and HMRC agrees not to pursue a criminal investigation into that behavior.¹ The protection from prosecution is the single most valuable thing on offer.

You have 60 days to do one of two things. Sign the Acceptance Letter and submit a valid Outline Disclosure, or sign the Rejection Letter. There is no middle ground. Failing to respond, or sending an Acceptance Letter without an Outline Disclosure, is treated as a conscious rejection, and HMRC is no longer bound by the CDF terms.¹

Accepting means admitting that your deliberate behavior caused a loss of tax. If there is substance behind HMRC’s suspicion, this is the only guaranteed path to avoid criminal prosecution. The protection is contractual, not discretionary.

Rejecting makes sense only if you genuinely believe no deliberate tax loss occurred. HMRC says it will consider innocent explanations, and if it accepts yours, you will receive a confirmation letter stating it no longer suspects fraud.¹ If it does not accept your explanation, it will start its own investigation, which may be criminal, and anything you said in the Rejection Letter can be used against you in court.

The 60-day window can only be extended in exceptional circumstances. To request more time you must email HMRC’s COP9 team directly, and HMRC will respond within seven days.³ Treat the deadline as hard and start gathering information immediately.

What Your Outline Disclosure Must Contain

The Outline Disclosure is submitted with the Acceptance Letter, inside the same 60-day period. It does not need precise figures, but it must be an honest account of your deliberate behavior drawn from your best recollection and whatever documents you can readily access.¹ Simply stating that deliberate behavior occurred is not enough. The outline must describe:

What you did — the specific actions that led to a tax loss
How you did it — the methods or mechanisms used
Who else was involved, with names, addresses, and tax references where known
How you benefited financially
The tax or calendar years during which the behavior took place

If you used companies, trusts, partnerships, or nominees, you must explain your relationship to each entity and the control you had over it. Non-deliberate irregularities in your tax affairs go in a separate section of the form.¹ An Outline Disclosure that mentions only non-deliberate behavior and omits any deliberate conduct is treated as invalid, which voids the CDF contract entirely.

The Full Disclosure Report and Certificate

Once the outline is accepted, the real work begins. The Disclosure Report must cover all losses of tax caused by both deliberate and non-deliberate behavior, state the correct tax position, and quantify every amount owed with supporting calculations.¹ HMRC can look back up to 20 years for deliberate losses, so the financial history involved can be extensive.⁴

A typical report includes a business history, a description of every irregularity and how it occurred, quantification of each one, the evidence behind each figure, and summaries reconciling those figures with the total tax owed. Bank statements, accounting records, professional valuations, and reconstructed ledgers are all commonly needed. The quality of this report directly affects your penalty level and how smoothly the investigation ends.

When the report is complete, HMRC asks you to sign a Certificate of Full Disclosure. Your signature, dated and witnessed, confirms the disclosure is complete, accurate, and honest to the best of your knowledge.¹ If HMRC later discovers the certificate was false, it can open a criminal investigation into the submission of a false document, separate from the underlying fraud. The CDF protection does not cover dishonesty in the disclosure process itself.

What You’ll Pay: Tax, Interest, and Penalties

A COP9 settlement has three parts: the unpaid tax, interest on that tax, and penalties calculated as a percentage of the tax lost.

Penalty Rates

For deliberate inaccuracies, the penalty range is 20% to 70% of the extra tax due. For deliberate and concealed inaccuracies, it rises to 30% to 100%.⁵ In some cases, penalties can exceed 200% of the tax lost.¹

Where you land inside those ranges depends on how well you cooperate, measured across three factors:

Telling — how quickly and fully you inform HMRC about the irregularities (up to 30% reduction)
Helping — how much you assist HMRC in working out the correct liability (up to 40% reduction)
Giving access — how readily you provide records and documents (up to 30% reduction)

Those reductions are cumulative, so full cooperation across all three can bring a penalty down to its minimum.⁶ Dragging your feet on records or giving vague answers directly raises the percentage you pay.

Interest

Interest runs on unpaid tax from the date it was originally due, not from the date HMRC opened the investigation. As of January 2026, HMRC’s late payment interest rate is 7.75%, calculated as the Bank of England base rate plus 4%.⁷ On liabilities stretching back years, the accumulated interest alone can be substantial.

Settlement

Once the Fraud Investigation Service accepts your Disclosure Report, the case moves to settlement. You sign a formal agreement committing to pay the tax, interest, and penalties, with a schedule setting out how and when the funds will be transferred.⁴ If you cannot pay in full immediately, HMRC may agree to a Time to Pay arrangement, though interest continues to accrue on any outstanding balance. Formal acceptance concludes the civil investigation and locks in the protection from criminal prosecution for the disclosed behavior.

HMRC’s Powers to Check What You Say

HMRC is not relying only on what you volunteer. Schedule 36 of the Finance Act 2008 gives officers broad powers to demand information and documents from you and from third parties during the investigation.⁸ A written information notice can require any person to produce information or documents reasonably required to check a taxpayer’s tax position, and third-party notices can be served on banks, employers, and business associates.⁹ HMRC can independently verify income, assets, and transactions without waiting for your version of events.

Ignoring a notice carries an initial £300 penalty, with further daily penalties of up to £60 if the failure continues, and up to £1,000 per day if a tribunal escalates the matter.⁸ Concealing or destroying documents caught by a notice is treated the same way.

There is one significant limit. HMRC cannot use an information notice to force disclosure of documents protected by legal professional privilege — that is, confidential communications between you and your lawyer for the purpose of giving or receiving legal advice, or communications prepared for the dominant purpose of litigation. Privilege does not cover communications with accountants or tax advisers, even where legal questions are involved, and it can be lost if protected documents are shared outside a controlled arrangement.

When COP9 Turns Into a Criminal Case

The civil track is not guaranteed. If you enter the CDF and then fail to make a complete, accurate disclosure, HMRC can treat the contract as breached and open a criminal investigation into both the underlying fraud and the submission of false documents.¹ Rejecting the CDF does not automatically trigger prosecution, but it removes the contractual protection and leaves HMRC free to escalate.

HMRC’s Criminal Investigation Policy points toward prosecution rather than civil settlement in cases involving organized or systematic fraud, deliberate concealment or false documents, abuse of a position of trust, repeat offending, links to wider criminality, money laundering (especially where professional advisers are involved), and threats, corruption, or obstruction of HMRC officers. Cases involving professional enablers or organized crime are especially likely to end up in court.

Offshore Income and Foreign Assets

If your irregularities involve offshore income, overseas assets, or activities carried on outside the UK, those issues belong in your COP9 disclosure. HMRC defines an offshore issue broadly to cover income from a source outside the UK, assets held abroad, activities conducted mainly overseas, and funds connected to unpaid UK tax that have been moved out of the UK.¹⁰

If you are already under COP9, any attempt to use the separate Worldwide Disclosure Facility will be referred to your investigating officer to decide whether it can be accepted within the existing COP9 framework.¹⁰ In practice, the COP9 disclosure should cover everything. Offshore penalties can be higher than domestic ones, and HMRC has extensive international data-sharing agreements.

Being Named as a Deliberate Tax Defaulter

HMRC has the power to publish the details of deliberate tax defaulters. Publication is triggered when an investigation results in one or more penalties for deliberate defaults involving tax of more than £25,000.¹¹ Your name, address, the nature of the default, and the amounts involved can appear publicly on the GOV.UK website for up to 12 months.

There is one way to avoid publication: earning the maximum reduction of penalties by fully disclosing all details of the defaults. HMRC will not publish information about someone who achieves the highest level of cooperation.¹¹ Half-hearted disclosure raises your penalty percentage and can also make your details public.

Why a Solicitor, Not Just an Accountant

COP9 investigations are complex, the financial exposure is large, and a misstep can lead to criminal prosecution. Most people who receive a COP9 letter engage a specialist tax investigation solicitor immediately. A solicitor’s communications with you are covered by legal professional privilege, so HMRC cannot compel their disclosure. Communications with accountants and tax advisers, even about legal questions, do not carry the same protection.

Involving a solicitor from the outset does three things. It keeps the Outline Disclosure drafted carefully enough to be valid without saying more than required. It keeps the 60-day deadline in view. And it gives you a single controlled channel for all communication with HMRC. Professional fees are significant, but modest against the cost of a botched disclosure that leads to inflated penalties or criminal charges.

1
GOV.UK. Code of Practice 9 from 14 June 2023 (accessible version)
2
GOV.UK. Fraud Investigation Service Technical Note
3
GOV.UK. Admit Tax Fraud to HMRC Using the Contractual Disclosure Facility
4
HM Revenue & Customs. Code of Practice 9
5
GOV.UK. Penalties: An Overview for Agents and Advisers
6
GOV.UK. Compliance Checks – Penalties for Failure to Notify – CC/FS11
7
GOV.UK. HMRC Interest Rates for Late and Early Payments
8
Legislation.gov.uk. Finance Act 2008 – Schedule 36
9
HM Revenue and Customs. Schedule 36 – Information and Inspection Powers
10
GOV.UK. Make a Disclosure Using the Worldwide Disclosure Facility
11
GOV.UK. Details of Deliberate Tax Defaulters