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.