Skip to content 
This case concerns our client Mr A, a successful businessman who was issued a COP9 letter by HMRC on 29th February 2016. This marked the initiation of an exhaustive inquiry by HMRC to ascertain potential tax fraud exceeding £100,000 on the part of Mr A. As Mr A’s accountants, we recognized that a COP9 investigation signified a serious matter that required our utmost diligence and care to ensure fairness to our client. COP9 denotes Contractual Disclosure Facility, allowing tax authorities to arrive at settlements on complex tax matters. In Mr A’s case, the COP9 letter and investigation were handled by HMRC officer Ms T, who offered Mr A the opportunity to make disclosures under COP9 regulations.
Prompt Rejection of COP9 Settlement Offer
Acting on our advice, Mr A decisively rejected this offer on 27th April 2016 through a response crafted by his accountant Mr K. The well-reasoned letter elucidated that Mr A’s accounts and overseas transactions were wholly bona fide and conducted legitimately, devoid of intentional omissions. It clarified that Mr A’s activities resulted in no loss to the revenue authorities or the exchequer.
Given the legitimate nature of Mr A’s financial dealings, we judged it prudent to reject the COP9 offer rather than accept insinuations of falsehoods. This allowed us to take an open yet principled stance. The prompt rejection also signalled our willingness to provide evidence supporting our claims regarding the validity of Mr A’s accounts and transactions.
Concerning Gaps in Communication and Continuity
Following Mr K’s letter rejecting the COP9 offer, there appears to be a questionable lack of communication between the accountant and HMRC over the next two years. It was only in late 2018 that HMRC officer Ms L took over the case from Ms T. Worryingly, Ms L erroneously referred to a prior communication between Ms K and Ms T that purportedly occurred in November 2017. Upon carefully perusing our records, we ascertained that no such communication took place.
This reference to a non-existent letter hinted at possible gaps in the continuity and rigour of the investigation process. As diligent accountants, we took note of this inconsistency, which cast doubts on the investigation’s compliance with procedural propriety. Sudden transfers of case handling coupled with absent or inaccurate records of correspondence did not reflect well on the continuity and care expected of a formal tax inquiry.
Providing Meticulous Responses to a Sweeping 44-Part Inquiry
Despite the gaps mentioned earlier, as reputable accountants, we sought to cooperate fully and transparently with the investigating authority. This approach was displayed when Ms L sent a remarkably sweeping inquiry in October 2019 encompassing 44 intricate questions covering numerous aspects of Mr A’s finances.
Rather than objecting to the inquiry’s expansive scope, our accountant Mr K meticulously addressed each of the 44 component questions in his comprehensive reply sent in February 2020. Elaborate details were provided on our client’s property holdings, bank accounts, credit cards, loans, inheritance, overseas investments and offshore accounts.
Particularly, the inquiry’s question regarding any offshore accounts was addressed unambiguously. Mr K’s letter referenced a sole offshore HSBC account in Dubai that Mr A had opened several years ago. It was elucidated that the account’s purpose was to assist a cousin based in Dubai, and it held no funds or information relevant to the inquiry.
The intent was to furnish HMRC with a sincere and transparent overview of Mr A’s financial circumstances, transactions and holdings over the past several years. As experts in accounting and taxation, we recognized that the best recourse was to respond to the sweeping inquiry in a spirit of good faith and openness.
HMRC’s Repetitive Questioning Despite Clear-Cut Responses
However, the subsequent correspondence from Ms L needed more consideration for the sincerity and thoroughness of our responses. In her letter dated 28th February 2020, Ms L reiterated a number of questions that had already been addressed exhaustively and unambiguously by Mr K earlier.
For instance, despite the clear reference to the Dubai HSBC account’s limited role, Ms L repeated the same question pertaining to the details of this offshore account. This repetitive questioning on issues that received definite responses conveyed an impression of indifference to the evidence we furnished. It also contributed to the unnecessary protraction of the inquiry process.
Demands for Exhaustive 15-Year Records of Gifts, Loans, Transfers
Additionally, Ms L’s letter put forth blanket demands for exhaustive records covering gifts, loans, and money transfers received over 15 years. We highlighted that such an expansive demand covering so many years was unreasonable, given that statutory requirements mandate maintenance of records for only six prior years.
Moreover, as part of the earlier 44-part response, Mr K had already disclosed and accounted for the inheritance money received by Mr A from Pakistan following his mother’s demise in 2004. Any further extrapolation seemed redundant.
Rather than pursuing imprecise and exhaustive demands, we expected the investigating authority to take recourse to Mr A’s tax records already available in HMRC’s databases from preceding years. As accountants familiar with protocols, this seemed the optimal approach compared to placing unreasonable demands on the client to furnish records from over 15 years ago.
Dogged Requests for Statement of Assets and Liabilities
Another conspicuous instance was Ms L’s repetitive request for a Statement of Assets and Liabilities from Mr A in her February 2020 letter. This was reiterated even after Mr K had provided sound legal reasoning in his earlier communication why such a declaration was not mandated in this case.
Mr K had rightly asserted that statements of assets and liabilities are only required in cases where under-declaration of income or tax evasion has been firmly established. However, since no proof of wilful omission or fraud had been demonstrated in Mr A’s case, such blanket declarations could not be demanded.
By repeating her request, Ms L’s letter implied a refusal to acknowledge the validity of Mr K’s lawful interpretation. Worryingly, the reiteration confirmed rather than countered Mr K’s stance. As Mr A’s defenders, we found such oblique communication highly objectionable and misleading.
Probing Company Finances Beyond Original Investigation Scope
Further, Ms L significantly expanded the ambit of the ongoing investigation by requesting elaborate details of the operations and finances of one of Mr A’s companies, named Aesthetic Sense Ltd. Granular information was sought on the firm’s services, pricing, revenues, payments and clients.
While businesses linked to Mr A understandably fell within the inquiry’s wider purview, the exhaustive manner of questioning crafted by Ms L strongly indicated that the principal objective was to assess and determine the company’s income and revenue generation. This intensive financial audit fell well outside the scope of a COP9 investigation, which aimed to ascertain if £100,000 in taxes had been deliberately evaded.
By excessively widening the investigation to conduct what amounted to a full financial review of one of Mr A’s concerns, HMRC and Ms L were overstepping their writ. We noted this infringement as defenders of our client’s legal protections and rights.
Probing Property Transactions Outside Investigation Timeframe
Possibly the most blatant excess, however, was Ms L’s pointed probing into certain property transactions executed by Mr A in Dubai. These transactions pertained specifically to the 2016-17 tax year and were duly declared and accounted for by Mr A in the tax filings for that year.
It was evident that the original timeframe of the COP9 investigation was expressly delimited by the date of issuance of the COP9 notice on 29th February 2016. All transactions covered were necessarily precedent to that date. Consequently, any attempt to interrogate dealings from the 2016-17 tax year represented a breach of the scope of this particular inquiry.
Despite Mr K underscoring this anomaly in clear terms through his communication dated 4th May 2021, Ms L stubbornly persisted in seeking further details of those property transactions in Dubai. Her repetitive requests to access records related to their acquisition cost and financing arrangements indicated a need for more adherence to the boundaries imposed by the investigation’s original framework.
Reprinting and Resending Same Letter Overlooking New Information
However, the most troubling indication of negligence and opacity emerged when Ms L reprinted a previous letter from 8th June 2021 and reissued the same letter with a revised date of 11th August 2021.
This was done notwithstanding Mr K’s detailed reply dated 16th July 2021, which had provided categorical responses to all the queries raised in the original June 2021 letter concerning the Dubai property transactions.
The reprinting and reissuing of the letter should have accounted for the new information furnished and demonstrated a wilful attempt to gloss over the facts presented in Mr K’s substantive 16th July communication. We found such obfuscation completely contrary to protocols and devoid of basis.
Contesting Incomplete and Inadequate Meeting Records
Matters came to a head when we requested and were granted a meeting with Ms L and her manager Mr R on 31st August 2022. However, the official notes recording the proceedings of this meeting, which we received on 27th March 2023, were found to need to be more complete and adequate.
A particularly egregious omission was the exchange where our advisor Mr S contended that HMRC’s actions indicated that they would surely have initiated a criminal investigation if any genuine evidence of tax fraud existed. In response, Mr R suggested that a criminal probe could be opened if we so wished.
The fact that such a crucial exchange was left out of the final minutes pointed to willful negligence in maintaining the transparency of official records. As stalwart defenders of our client’s rights, we raised strong objections to this selective minuting which failed to capture the full essence and context of discussions.
Key Takeaways from This COP9 Investigation Journey
Looking back at the long, convoluted COP9 investigation undertaken by HMRC against our client Mr A, spanning over seven years since its inception in 2016, a few key lessons and takeaways emerge:
- As reputable accountants, we leveraged our expertise to mount a principally driven and transparent response, providing comprehensive details sought by the tax authorities to establish the legitimacy of Mr A’s financial dealings.
- However, as the inquiry progressed, we became increasingly cognizant of overreach, opacity and negligence on the investigating team’s part through repetitive questioning, inadequate continuity, and inaccurate record-keeping.
- We realized that sometimes a cooperative approach can be misconstrued as acquiescence by an adversarial authority. Consequently, we adopted a responsive yet assertive stance, asking incisive questions and demanding clarifications when warranted.
- Full-fledged criminal investigations require incontrovertible proof of deliberate fraud and misconduct, which is absent here. However, despite no substantial breakthroughs, the tax team appeared reluctant to conclude or close the matter.
- As Mr A’s steadfast defenders and ethical accountants, we remained resolved to hold the authorities accountable to procedural propriety, scope compliance and transparency. We fulfilled our commitment to protecting our client’s lawful rights and interests while sincerely cooperating within reasonable bounds.
- Overall, this case underscores the role of accountants as conscientious gatekeepers who balance cooperation with questioning, pursue transparency while eliminating opacity, and maintain client advocacy while respecting legal compliance.
In conclusion, this protracted engagement has underscored the crucial duty of accountants to act as their clients’ stalwart advocates in navigating complex legal inquiries. We upheld professional ethics and the highest service standards by liaising with rigorous transparency while challenging overreach and cooperating sincerely while disputing opacity. Our steadfast stewardship of Mr A’s legitimate interests in the face of an elongated investigation reinforces that client trust and robust counsel are the cornerstones of reputable accounting. As stout defenders of lawful compliance and procedural propriety, we will continue striving to bring such cases to their rightful closure. For COP9 Tax Investigations, tax resolution or compliance, please contact Tax Accountant at 0800 135 7323 or email info@taxaccountant.co.uk for expert advice.