Are you the subject of an HMRC investigation conducted under COP8? Here’s what you need to know about HMRC COP8 and how we can help you manage the process, bringing matters to a conclusion.

What is Code of Practice 8?

HMRC’s Fraud Investigation Service (FIS) opens COP8 tax investigations when it suspects someone has underpaid tax through complex tax arrangements or structures. HMRC’s FIS is its elite investigation office; its officers are specially trained to challenge your tax affairs and to recover tax, interest and penalties. With this in mind, communicating through specialist representation is essential.

While most HMRC enquiries are focused on a single tax year, COP8 investigations can often lead to HMRC enquiring into historical periods and both personal (including family) and business tax affairs. In our experience, COP8 checks can commonly involve offshore aspects too, which can add a layer of complexity.

Why am I being investigated by HMRC?

HMRC receives financial information from numerous sources in the UK and overseas. If HMRC has opened a COP8 investigation, it likely has information that suggests your income or gains could be beyond that which has been declared to HMRC. HMRC will seek to test whether the information it holds is correct and whether there has been any undeclared income or gains.

In many cases, any concerns HMRC FIS has can be adequately explained and evidenced. However, where time has passed or where limited evidence is held, HMRC FIS can make unfair assumptions, which can lead to it believing tax and penalties are due. The validity of these assumptions and associated decisions needs to be challenged robustly and promptly, as they may lead to HMRC FIS making unfair assessments of tax and penalties. Our specialist Tax Investigations & Dispute Resolution team can represent you in challenging these assessments.

What are HMRC’s powers?

To establish whether you have underpaid tax and to understand the behaviour that led to your underpayment, HMRC will request certain documentation. Such requests can be onerous, and if you don’t have the knowledge or confidence to challenge HMRC, you could find yourself subject to what can only be described as a ‘fishing expedition’, where HMRC takes advantage of your willingness to cooperate. This will lead to the enquiry becoming even more time-consuming and is unlikely to help expedite the check.

Our specialists will protect you throughout the enquiry to ensure that HMRC is not expanding its checks unnecessarily or making requests and decisions that are not in accordance with its own laws.

Can HMRC charge penalties?

Once an enquiry has been resolved, HMRC may impose penalties. Buzzacott has an excellent track record in ensuring clients are charged only the minimum penalty applicable by law. This is important as HMRC’s penalty regime can be punitive. We will ensure that HMRC has the relevant information and facts, which can, in many cases, lead to the penalty being suspended and not payable.

What is the difference between COP8 and Code of Practice 9 (COP9)?

HMRC’s FIS operates two Codes of Practice, COP8 and COP9. HMRC operate COP9 in cases where it suspects fraud and allows individuals to disclose any ‘deliberate’ errors in exchange for immunity to prosecution.

Cases initially opened under COP8 can be transferred to COP9, where deliberate behaviour is either suspected or established, thus providing the taxpayer with immunity from prosecution. Under COP9 the process affords the taxpayer the opportunity to disclose and report their irregularities. Some FIS investigators prefer COP8 because they drive the investigation process and some have been known to open cases under COP8 despite suspecting serious fraud from the outset. A common misunderstanding is that a person under COP8 enquiry can be charged deliberate penalties and can at anytime be referred for criminal investigation!

Should HMRC open a COP8 enquiry, but you have knowingly submitted false returns, then we strongly recommend applying to make a voluntary disclosure under the COP9. Our specialists have considerable experience in supporting clients through the COP9 disclosure process and ensuring the disclosure is accepted by HMRC, meaning that immunity is granted.

How we can help

If you are placed under a HMRC COP8 tax investigation, you should immediately seek specialist advice to help and guide you around the potential pitfalls to ensure you are best protected and reduce the liability that might otherwise be due. By choosing to get specialist advice from Buzzacott, we will:

• Carry out a comprehensive review of your tax affairs, working with you and your professional adviser, to ensure we have a full understanding of the issues and risks you are facing;

• Prepare a strategy going forward to minimise your potential exposure to unnecessary tax, interest and penalties;

• Should a disclosure be necessary, we will present this to HMRC to ensure that you are treated fairly and proportionately;

• Ensure that HMRC’s check does not expand unnecessarily;

• Aim to fast track your investigation to resolution and closure of all issues to your satisfaction at minimum cost and disruption to you.

Get help today

Call us today on +44 020 3820 4553 or fill in the form below and a member of our team will be in touch. All communications are in the strictest confidence.