Offshore Disclosure: HMRC COP9 vs IRS Non-Wilful Rules

Offshore disclosure becomes dangerous for a US-UK dual filer at the exact moment two routes open at once. HMRC's Code of Practice 9 requires a written admission of deliberate behaviour. The IRS streamlined procedures require a signed certification of non-wilful conduct. Both documents describe the same accounts, and both revenue authorities exchange information.

That is the whole problem in four sentences, and it is the reason this particular fact pattern should never be handled by a UK investigations specialist and a US expat filer working in separate rooms. Each of them, acting entirely competently within their own jurisdiction, will draft a document that undermines the other. This guide sets out how the two regimes actually interact, where the genuine conflict lies, where the perceived conflict evaporates on closer reading, and how the sequencing and the wording are handled so that one submission does not destroy the other.

Why this collision is happening more often in 2026

Three data streams have converged. The Common Reporting Standard delivers HMRC account-level data from over a hundred jurisdictions. The UK-US intergovernmental agreement implementing FATCA moves reportable account data in both directions under the authority of the exchange of information article in the UK-US double taxation convention. And HMRC's Fraud Investigation Service has become markedly more willing to open Code of Practice 9 on the strength of that data rather than waiting for a whistleblower or a criminal referral.

The population caught in the middle is specific and affluent: US citizens and green card holders who have lived in the United Kingdom for years, who hold UK and third-country accounts, who may have claimed the remittance basis historically, and who have either never filed with the IRS or filed incompletely. Many are accidental Americans who genuinely did not know. Some are not. A number sit uncomfortably between the two, which is precisely where the drafting risk concentrates.

The trigger is usually mundane. A nudge letter arrives, or a routine enquiry escalates, or a UK adviser reviewing the position for an unrelated transaction notices the omission and recommends putting matters right on both sides. The client, sensibly, asks to regularise everything at once. It is at that point that someone must decide which document gets written first, and in what terms.

What Code of Practice 9 and the Contractual Disclosure Facility actually require

Code of Practice 9 is HMRC's civil investigation procedure where it suspects tax fraud. It is offered together with a contract, the Contractual Disclosure Facility. The bargain is straightforward: the taxpayer makes a complete, accurate, open and honest disclosure of all deliberate conduct that brought about a loss of tax, and in exchange HMRC undertakes not to open a criminal investigation into the conduct disclosed. The current version of the code applies to cases opened on or after 14 June 2023 and is published in full on GOV.UK.

The taxpayer has 60 days from receipt of the offer to accept or reject it. That period is extended only in exceptional circumstances. Silence is treated as rejection, and rejection routes the case toward either a civil investigation without the criminal protection or a criminal investigation outright. The rejection itself is not a neutral act; HMRC retains it, and it is capable of being deployed later as evidence of the taxpayer's state of mind.

What must the outline disclosure contain?

This is where the cross-border difficulty crystallises. The outline disclosure is not a holding letter. Under the current code it must contain an admission of the taxpayer's deliberate behaviour together with a full description of that behaviour: what was done, how it was done, over what period, who else was involved, and what benefit the taxpayer derived. It must also disclose irregularities that were not deliberate, including careless errors and errors made despite taking reasonable care. Merely asserting that deliberate behaviour caused a loss of tax, without explaining it, does not satisfy the code.

A formal disclosure report follows, supported by certified statements of assets and liabilities and a certificate of full disclosure. The investigation can reach back twenty years where deliberate behaviour is established. HMRC's own procedural guidance for its investigators sits in the Fraud Civil Investigation Manual, and reading it alongside the code tells you a great deal about how the outline disclosure will be assessed.

What happens if you accept the CDF but deny deliberate behaviour?

Practitioners sometimes hope for a middle path: accept the contract, secure the criminal protection, and characterise the conduct as careless. The code does not accommodate that comfortably. If a taxpayer accepts the CDF and then contends the behaviour was not deliberate, HMRC will consider the explanation offered; where it regards the explanation as inadequate, it treats the position as a repudiation of the agreement and its rights to investigate criminally revive. Anything already disclosed remains available to it.

Equally important for the cross-border analysis: the criminal undertaking binds HMRC and nobody else. The code is explicit that it cannot bind other law enforcement agencies or regulatory bodies, and that information supplied to HMRC may be passed to a relevant authority in appropriate circumstances. A foreign revenue authority operating under a treaty exchange article is exactly the sort of recipient that language contemplates. The CDF is not a confidentiality agreement, and it should never be presented to a client as one.

What the IRS streamlined procedures require

The Streamlined Foreign Offshore Procedures are open to US taxpayers who meet a non-residency test and whose failures were non-wilful. The residency condition for citizens and lawful permanent residents requires, in at least one of the three most recent years for which the due date has passed, no US abode and physical presence outside the United States for at least 330 full days. The mechanics and the eligibility conditions are set out by the IRS.

The submission comprises three years of delinquent or amended returns with all required international information returns, six years of FBARs filed electronically with FinCEN, full payment of tax and interest, and a signed certification on Form 14653. The certification is not a formality. It is a statement made under penalties of perjury, it requires a narrative of the specific facts and circumstances behind the failures, and it is the document on which the entire penalty relief depends. Where a compliant submission is accepted, relief covers failure-to-file, failure-to-pay, accuracy-related, information return and FBAR penalties.

What does non-wilful actually mean to the IRS?

The IRS defines non-wilful conduct as conduct due to negligence, inadvertence or mistake, or conduct resulting from a good faith misunderstanding of the requirements of the law. The inverse concept, wilfulness, has been developed by the federal courts to mean the voluntary intentional violation of a known legal duty, and in the civil FBAR context has been held to extend to reckless disregard and wilful blindness. That last extension matters enormously here, because a great many dual filers who sincerely regard themselves as non-wilful have facts in the file, such as an unanswered question on a tax organiser or an account opened after signing a FATCA self-certification, that an examiner could characterise as reckless.

There is no closing agreement at the end of a streamlined submission and no formal acceptance letter confirming the certification has been believed. If an examination later determines the original non-compliance was fraudulent or the FBAR violation wilful, the protections fall away. A streamlined submission is therefore best understood as a sworn representation that remains open to challenge, not as a settled outcome.

Deliberate versus wilful: how far apart are the two tests?

The instinctive reading is that HMRC's deliberate and the IRS's wilful are the same concept, so that admitting one destroys the other. The instinct is broadly right but not precisely right, and the gap between them is where the work is done.

Feature	UK: COP9 / Contractual Disclosure Facility	US: Streamlined Foreign Offshore Procedures
Core admission required	Deliberate behaviour causing a loss of tax, described in full	Certification that failures were non-wilful
Document	Outline disclosure, then formal disclosure report	Form 14653 certification, signed under penalties of perjury
Deadline discipline	60 days from the CDF offer; extension only exceptionally	No deadline, but must precede any IRS contact or examination
Look-back period	Up to 20 years where deliberate behaviour is established	3 years of returns; 6 years of FBARs
Criminal protection	Yes, contractual, from HMRC only, conditional on full disclosure	None; no immunity is conferred by a streamlined filing
Availability once the authority has opened its case	Offered by HMRC, or requested voluntarily before criminal investigation begins	Unavailable once the IRS has initiated an examination or investigation
Finality	Contractual settlement with certified statements	No closing agreement; open to later challenge
Behaviour spectrum accommodated	Deliberate conduct plus all other irregularities in the same disclosure	Negligence, inadvertence, mistake, good faith misunderstanding only

Three distinctions do real work. First, scope of subject matter. A COP9 admission attaches to specific conduct in relation to specific UK tax losses. It does not automatically follow that the taxpayer's US filing failures shared that state of mind. A person may have deliberately suppressed UK tax on a trading source while being entirely ignorant that US citizenship carried a worldwide filing obligation at all. Those are separable propositions.

Second, scope of period. The UK regime looks back twenty years; the US streamlined submission covers three tax years and six FBAR years. Conduct that was deliberate in 2009 need not describe the taxpayer's state of mind in the years actually within the streamlined window.

Third, scope of person. Deliberate conduct by a company, a trustee or a family member is not automatically the taxpayer's own wilfulness for federal purposes, though the argument is fact-sensitive and no reliance should be placed on it without careful analysis of who did what.

Where those distinctions genuinely apply, a coherent position exists. Where they do not, and the same accounts, same years and same state of mind underlie both, there is no drafting solution. The honest advice at that point is that the streamlined route is unavailable, and the US position must be regularised through a different channel.

Will HMRC and the IRS actually see each other's disclosures?

Assume yes, and plan accordingly. Three mechanisms are relevant. Automatic exchange under the UK-US FATCA intergovernmental agreement moves reportable account data in both directions each year under the exchange of information article of the double taxation convention. Exchange on request permits either authority to ask the other for information relevant to administering its own taxes, and a live fraud investigation is a paradigm case for such a request. Spontaneous exchange permits an authority to volunteer information it believes will interest its counterpart.

Whether a complete COP9 disclosure report is routinely transmitted to the IRS is a different question from whether it can be. In practice the more common route is narrower and quite sufficient to cause harm: a US person appears in UK data with accounts that were never reported on an FBAR or Form 8938, and that fact alone changes the character of a subsequent streamlined submission. The planning assumption should be that anything written for one authority may be read by the other, and that the two documents will be compared. Draft as though a single reader will hold both.

Sequencing: which document is written first?

The sequencing decision follows from an honest behavioural assessment, taken before either document is drafted. That assessment is the deliverable that matters most, and it should be documented contemporaneously.

Where the conduct was genuinely careless on both sides

If the facts do not support deliberate behaviour, the first question is whether COP9 is the right UK route at all. HMRC opens Code of Practice 9 where it suspects fraud; suspicion is not proof, and the code contemplates the possibility that the recipient has nothing deliberate to disclose. Responding to a COP9 offer by denying deliberate conduct is a serious step with real consequences, and it should be taken only where the evidence supports it and with UK investigations counsel engaged from the outset. Where the denial route is correct, the UK matter may instead be resolved through a civil enquiry or the Worldwide Disclosure Facility, and the US streamlined route remains coherently available.

Where the conduct was genuinely deliberate

The streamlined route is not available and should not be attempted. Signing Form 14653 in these circumstances is a false statement under penalties of perjury, made to a federal agency, on facts that a foreign revenue authority already holds in writing. The US position is instead regularised through the IRS Criminal Investigation Voluntary Disclosure Practice, which is designed for taxpayers with potential criminal exposure and which, unlike streamlined, is built to receive an admission rather than a denial. The two regimes are then aligned rather than opposed, which is a considerably more comfortable place to be. The trade-off is a longer look-back and a materially higher penalty framework.

The mixed fact pattern

This is the majority of real cases. Deliberate conduct on one UK source, genuine ignorance of the US filing obligation, and a set of accounts that appear in both narratives. Here the sequencing is deliberate and the drafting is surgical.

• Complete the behavioural analysis for both jurisdictions before a word is committed to either document, and record which specific conduct, in which specific years, is being characterised which way.
• Draft the outline disclosure so that it satisfies the code in full on the UK conduct without volunteering characterisations of the taxpayer's US state of mind, which are not what HMRC has asked for and which no adviser should insert.
• Draft the Form 14653 narrative so that it addresses the US failures on their own facts, does not contradict anything in the UK document, and does not pretend the UK matter does not exist.
• Reconcile the two documents line by line before either is filed. The reconciliation is the deliverable that prevents the disaster.
• Where the analysis will not reconcile, change the route, not the wording.

Wording discipline: what actually goes wrong

Most damage in these files is self-inflicted and traceable to a small number of drafting habits.

• Blanket characterisations. An outline disclosure that opens by describing the taxpayer's entire offshore position as deliberately concealed, when the deliberate element is confined to one source, hands away the US position for no UK benefit.
• Recycled narratives. The Form 14653 narrative is sometimes assembled from the UK disclosure report because it is the most complete chronology in the file. The chronology may be reusable; the adjectives are not.
• Inconsistent dates and figures. Two documents describing the same accounts with different opening balances or different account-opening dates invite exactly the scrutiny the exercise exists to avoid. The UK tax year runs to 5 April and the US year to 31 December; conversions and apportionments must be done once, centrally, and used in both.
• Silence about the other jurisdiction. A Form 14653 narrative that presents the taxpayer as having recently discovered a filing obligation, filed while a UK fraud investigation is running and disclosed nowhere in the certification, reads very badly if the two are ever placed side by side.
• Assuming the criminal promise travels. It does not. It binds HMRC, in respect of the conduct disclosed, and nothing further.

The asset classes that generate the mismatch

The structural point worth understanding is that a great deal of US non-compliance among UK residents is generated by holdings that are entirely lawful, visible and tax-favoured in the UK. That asymmetry is the strongest available evidence of a good faith misunderstanding, and it should be developed properly rather than asserted.

• ISAs. Tax-free in the UK, fully taxable to a US person, and frequently invested in funds that are passive foreign investment companies for US purposes.
• Offshore bonds and non-reporting funds. UK chargeable event rules and US PFIC rules produce entirely different answers on entirely different timelines.
• UK pensions. Treaty relief exists but is neither automatic nor self-executing, and reporting obligations can persist even where the income is not currently taxable.
• Offshore trusts and family companies. These drive Forms 3520, 3520-A and 5471, which carry substantial standalone penalties and which are frequently the largest number in the US analysis.
• Legacy remittance basis positions. A remittance basis claim that was correct in the UK produces no equivalent relief in the US and often explains the underlying divergence.

Quantifying this properly matters. Clients decide between routes on numbers, and the FBAR exposure is frequently the number that drives the decision. Our FBAR penalty calculator gives an indicative range before the full analysis is commissioned, and the broader calculator suite covers the adjacent UK and US positions.

A worked sequence

A representative engagement runs as follows. Days one to seven: secure the 60-day date, confirm exactly what has been offered, instruct UK investigations counsel, and impose a hold on any US filing already in progress. Days seven to twenty-five: full asset and account reconstruction across both jurisdictions, covering the full UK look-back and the streamlined window, in a single dataset used by both workstreams. Days twenty-five to forty: behavioural analysis, source by source and year by year, resulting in a written route recommendation for each jurisdiction. Days forty to fifty-five: draft both documents in parallel and reconcile them. Days fifty-five to sixty: file the UK acceptance and outline disclosure. The US submission follows once the UK position is stable, with the certification narrative written to the reconciled facts.

Two practical points. First, do not file the US submission during the 60-day window merely to get ahead of the UK process; the facts are not yet settled and the certification will be written on sand. Second, privilege is not symmetrical. UK legal professional privilege and the more limited US federally authorised tax practitioner privilege do not cover the same ground, and the US privilege does not extend to criminal matters. Structuring the analysis so that sensitive assessments are produced under appropriate legal instruction is a decision to take at day one, not day forty.

How Jungle Tax approaches these engagements

We act for US-UK dual filers where both revenue authorities are, or shortly will be, looking at the same accounts. The work is a single integrated file rather than two parallel engagements: one reconstruction, one behavioural analysis, two documents drafted against each other and reconciled before either is filed. Where the streamlined route is genuinely available we run it through our IRS streamlined filing practice. Where it is not, we say so early, because the most expensive outcome in this area is a certification that should never have been signed. Our US-UK cross-border team works alongside UK investigations counsel throughout, and the wider private client practice handles the residual UK positions that surface during reconstruction. Further reading sits in our guides library.

Speak to us before either document is drafted

If a Code of Practice 9 offer has arrived and a US streamlined submission is in contemplation, the sequencing decision is time-limited and consequential, and it is far easier to get right before anything is written than to repair afterwards. We work confidentially, we give an honest view on which routes are genuinely open, and we do not file certifications the facts will not support. Contact our cross-border team for a confidential consultation, and please do so within the first days of the 60-day period rather than the last.