Code of Practice 8
Code Of Practice 8 (COP8) is used in cases where there has been a substantial loss of tax revenue or where complex tax arrangements or avoidance schemes are involved, but where HMRC does not yet suspect fraud.
Are you subject of an HMRC Code of Practice 8 enquiry?
COP8 sets out how HMRC’s Fraud Investigation Service (FIS) conducts civil investigations in complex cases where fraud is not suspected, but where significant tax issues or sophisticated arrangements require specialist scrutiny.
Receiving a letter from a FIS team should be taken seriously. These enquiries are handled by highly trained officers with far broader powers and expertise than those in standard HMRC compliance teams.
What type of cases might be subject to COP8?
Historically COP8 enquiries have covered international subjects such as:
Tax residence
Tax residence
Tax domicile
Tax domicile
Company residence
Company residence
Transfer of assets abroad
Transfer of assets abroad
The typical COP8 case is hard to define, as it usually involves matters that are complex, unusual, and/or involve significant sums of money.
Importantly, COP8 is not used where HMRC believes there has been deliberate behaviour or tax fraud involved (except in cases where the suspected perpetrator is deceased). However, COP8 enquiries can be escalated to a fraud investigation if HMRC uncovers evidence suggesting deliberate wrongdoing.
In recent years, HMRC has increasingly used COP8 to address tax avoidance matters, particularly those involving the use of manufactured tax avoidance schemes.
COP8 has also become a common route for enquiries following disclosures made under the Worldwide Disclosure Facility or Let Property Campaign, especially where key issues have not been addressed or HMRC needs to raise further questions.
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Is it possible to request Code of Practice 8?
COP8 may also be requested by tax advisors in some cases. This can include situations that are unsuitable for disclosure through standard channels, because they span multiple taxes or involve issues requiring significant specialist expertise.
Code of Practice 8 cases can vary widely in scope, which makes it important to seek professional advice before speaking to HMRC.
If you receive a COP8 or Code of Practice 9 (COP9) letter, you should consult an experienced specialist tax investigations advisor who can effectively support you and work alongside your existing advisors, such as accountants, lawyers, bankers or Trustees.
While fraud may not be suspected at the outset of a COP8 enquiry, the investigation should be treated seriously. HMRC usually pursue these cases as they believe substantial tax is at stake; the FIS typically only opens a case where their perceived tax risk exceeds £500,000.
Where practitioners identify issues that may involve deliberate behaviour they should consult with an investigation’s specialist. We can review the background and determine whether it is necessary to secure immunity from prosecution and apply for the protection of COP9 known as the Contractual Disclosure Facility.
How Crowe can help
We have successfully defended many clients who are subjected to enquiries by HMRC.
Our Tax Disputes and Investigations specialists will support you throughout every stage of the disclosure process. We take a hands-on approach; some cases require a robust stance to be taken with HMRC, or sometimes a practical or discreet solution needs to be negotiated.
Our team is approachable and provides a personal and comprehensive service.
We're here to help
Our experienced and award-winning Tax Disputes and Investigations team can help you navigate your COP8 case and ensure you meet your obligations.
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We are an independent tax advisory firm that helps clients navigate HMRC investigations, disclosures and disputes.
If you would prefer to speak to one of our specialists, please call our free confidential consultation line on +44 (0)800 656 9900.