Where CDF offer is made 30 June 2014 onwards: action following issue of Code of Practice 9: rejection but cooperation offered
The only way a customer can be certain that HMRC will not pursue a criminal investigation with a view to prosecution is to accept the offer of Contractual Disclosure Facility (CDF) and comply with its terms.
A rejection of a CDF does not necessarily mean that the customer does not wish to cooperate with your investigation. On receipt of confirmation from Criminal Investigation (CI) that they do not wish to commence a criminal investigation at this time, you must decide whether you wish to meet with the customer and determine how to proceed with your investigation.
If you meet with the customer, there are various possible outcomes.
If, after you have discussed the matter further and you have the challenged the customer they
- continue to deny any irregularity, or
- fail to provide an adequate response to your suspicions
you should proceed to investigate the case yourself. You can accept any offer of cooperation, such as voluntary provision of records and explanations as this will reduce any future penalty and should be encouraged. You must not encourage the customer, or their agent, to produce a Disclosure Report, even if they offer to do so. You must make it clear that you are not suggesting they produce a report and that costs incurred for producing such a report are their own responsibility.
The customer, on challenge, makes a disclosure. You need to decide whether it is appropriate to stop the meeting and refer back to CI. If a referral to CI is not necessary, you should explain that whilst a disclosure has been made
- the customer does not have the assurance of the CDF, and
- request the customer provides records and information to verify their disclosure.
The customer may choose to present this in the form of a Disclosure Report but you must not request it in that format. At the end of your investigation you must expect the customer to provide the four certificates that make up the Formal Disclosure.
- The customer is able to satisfy your concerns with an innocent explanation. You should close the case, or take action to address any non-fraudulent irregularities disclosed.
If the offer of a meeting is declined you should proceed on the basis that the customer has no wish to make a disclosure. In such cases it is important that you check to make sure the customer, or their agent, has been sent written confirmation explaining that as the CDF has not been accepted, HMRC are conducting their own investigation. You should request any records you require, using formal powers if necessary. You must never rule out the possibility that the customer may reconsider your request for a meeting.
If you decide that a meeting is not appropriate you must decide how to proceed with your investigation, using formal powers if necessary to request any records or information needed.