Fraud Investigations

Fraud Investigations

HMRC uses the Contractual Disclosure Facility (CDF), operated under Code of Practice 9, to investigate certain cases of suspected tax fraud. Although the CDF is a civil process, taxpayers who fail to cooperate with HMRC risk facing a criminal investigation, which may lead to a criminal prosecution.

Understanding the Contractual Disclosure Facility (CDF)

When HMRC suspects tax fraud, they will invite the taxpayer to participate in the CDF. The taxpayer has 60 days to decide whether to admit fraud, and submit an outline disclosure detailing the extent of the fraud, or deny their involvement in fraud. The time given under the process to respond (60 days) is often not enough for the work that needs to be undertaken, so advice should be taken as soon as possible, ideally as soon as the letter is received from HMRC.

By accepting that there has been fraudulent behaviour, and cooperating with the process, taxpayers will receive immunity from a criminal investigation by HMRC. However, failing to respond, denying fraud, or choosing not to cooperate may result in a criminal investigation, or, at the very least, significantly higher penalties than would otherwise be the case.