The Contractual Disclosure Facility or CDF is the new way in which HMRC tackle suspected tax fraud.
The CDF facility provides an option for the taxpayer to declare all their tax irregularities and settle them along with interest and penalties. In return HMRC will not bring criminal charges, provided the declarations under the CDF are complete and accurate.
We have seen a number of examples of HMRC applying the new CDF process recently. It is important to note if the taxpayer does decide to make a detailed declaration that good consideration should be given the content of the “Outline Disclosure” that HMRC request within 60 days of their initial letter. HMRC do put a lot of emphasis on what was said in the Online Disclosure during the rest of their investigation, in terms of penalties and threatening to bring criminal charges.