A new Contractual Disclosure Facility (CDF) was launched by HMRC on 31 January 2012. The CDF is a facility for taxpayers to disclose serious tax fraud to HMRC. The CDF is only suitable for taxpayers who want to admit to tax fraud. It is not a method to notify HMRC about errors, mistakes or avoidance schemes where no fraud has taken place. If HMRC writes to an individual about a suspected tax fraud they will be offered the opportunity to use the CDF. The CDF can also be used by taxpayers wishing to disclose their part in a tax fraud.
Under a CDF HMRC will not criminally investigate and prosecute taxpayers over fraud disclosed as part of the CDF contract. However, the taxpayer must commit to the following:

Tell HMRC about all taxes that have been deliberately evaded, with no exceptions.
Give HMRC details of all taxes evaded within 60 days of being offered the contract.
Sign a statement to say accurate and complete details of the tax fraud have been provided.
Pay all taxes, duties, interest and penalties due.
Stop any fraud immediately.
If all the conditions are met, the investigation will then be carried out using civil powers, with a view to a civil settlement for tax, interest and a financial penalty.
Under CDF there are 3 options:

Owning up to fraud: the CDF route.
Deciding not to own up to fraud: the denial route.
Not replying to HMRC: the non-cooperation route.