COP9 and tax investigations – Accountancy Daily

Receiving a COP9 and an offer to disclose under the Contractual Disclosure Facility (CDF), is an extremely serious matter and represents the last civil chance for those who may not have paid the correct amount of tax. Danielle and Riocard focus on an overview of the initial stages of the COP9 process, and highlight the importance of the outline disclosure report (ODR) which lays the foundations for a successful outcome. Overall, the process is complex and seeking a professional and expert advisor is strongly recommended – the Chartered Institute of Taxation (CIOT) has written to its members urging those without the necessary experience not to undertake COP9 work, due to difficult positions clients have been placed in by inexperienced advisors.

You can read more in the article on Accountancy Daily (subscription needed).

What to do if you receive a COP9 offer

We have commented in detail on the COP9 process previously – the key takeaway is that you should seek immediate professional advice. The COP9 process is incredibly detailed and can be a time-consuming ordeal as well as being financially and emotionally draining. At haysmacintyre, we have a wealth of experience in dealing with COP9 investigations. We have a proven track record in obtaining favourable results for clients, allowing them to draw a line under the matter and move forward without further intrusion from HMRC.

For further support and advice, get in touch with Danielle or Riocard.

Code of Practice 9 enquiries – football agents

What is COP9?

Code of Practice 9 is HMRC’s most serious civil investigation type, which carries an allegation by HMRC of fraud or deliberate behaviour leading to a tax loss.

COP9 is one step away from criminal prosecution and is seen as the ‘last chance’ by HMRC – make a full disclosure and pay the tax, in exchange for avoiding criminal prosecution.

The COP9 process invites a disclosure under the Contractual Disclosure Facility (CDF) where all tax matters are fully disclosed. HMRC can still open a criminal prosecution into any matters which are not disclosed or if the disclosure is incomplete.

We strongly recommend seeking specialist advice as soon as the CDF is issued, as most accountants do not have the expertise to deal with COP9, or the insurance to undertake such work. In addition, you have 60 days within which to respond and make an initial disclosure, which cannot be extended, and it is this initial disclosure which offers the protection from criminal investigation.

What are the issues HMRC is looking at?

We understand the recent COP9 enquiries have been issued in relation to commission payments.

HMRC is likely to hold concrete information on such transactions and must believe they have strong evidence of deliberate behaviour for them to allege tax fraud.

We also understand HMRC has been looking into ‘dual representation contracts’ in the Premier League. This is where the same agent represents both the player and the club in transfers, negotiations, or new contracts.

Dual representation is prohibited by FA rules, however, it can be allowed if all parties provide written consent. Under this practice, the portion of the fee relating to work for the club avoids VAT, Income Tax and National Insurance.

In 2021, HMRC updated its guidance on this issue and tightened the rules by stating clubs need to keep records of evidence that they are legitimately working on both sides of the contract, as well as showing the extent to which they represent the club and the player, rather than just splitting it 50/50.

It is clear HMRC is taking a keen interest in the tax affairs of the football industry and it has shown it is willing to use its most powerful tools available to investigate any errors.

HMRC is regularly scrutinising football and associated stakeholders due to the amount of money in the game at the top level, and therefore the tax potentially lost if a mistake is made.

If you believe there are any irregularities in relation to your tax affairs, it is strongly recommended to seek professional advice. Making a voluntary disclosure, before HMRC contacts you, will result in the most favourable outcome, both in terms of the lowest possible penalties and the shortest possible timeframe to resolution, compared to an HMRC enquiry.

Should you require any assistance, please contact Danielle Ford, Partner and Head of Tax Disputes and Resolutions or Riocard Hoye, Senior Manager.

Get in touch