Code of Practice 8
COP8 is used in cases where there has been a significant loss of revenue or where complex tax arrangements or avoidance schemes have been used, but where fraud is not yet suspected.
Are you subject of an HMRC Code of Practice 8 enquiry?
Code of Practice 8 (COP8) is a set of rules governing how HMRC’s Fraud Investigation Service (FIS) will carry out civil investigations in complex cases where fraud is not suspected.
Anybody who receives a letter from a FIS team should be concerned as they are generally worked by well-trained officers with a much broader remit than your average officer in old style tax office 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 difficult to define and usually involves matters that are complex, unusual, and/or involve significant sums of money.
Importantly, COP8 is not used by HMRC where there is deliberate behaviour or tax fraud involved (the exception being a deceased perpetrator), although a COP8 could be escalated to a fraud investigation if HMRC’s findings begin to point towards this.
In more recent years, COP8 has been used by HMRC in cases of tax avoidance often involving the investigation of tax schemes.
COP8 has also become the route for enquiries to be pursued following disclosures made under the Worldwide Disclosure Facility or Let Property Campaign where known issues have not been covered or supplementary questions need to be asked.
Is it possible to request Code of Practice 8?
COP8 may also be requested by tax advisors who have cases which are away from the norm. For example, there might be situations which are inappropriate to disclose using normal routes, because they cut across different taxes and/or include elements where significant specialist input may be necessary.
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 a specialist tax advisor who can knowledgably assist clients and their agents (including accountants, lawyers, bankers or Trustees, etc.).
While there might be no suspected fraud at the outset, the investigation should be treated seriously, as HMRC will usually believe a large amount of tax is at stake. The FIS typically only open a case where there is at least £500,000 of tax at risk.
Where practitioners come across situations they suspect involve deliberate behaviour they should consult with an investigations 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 Resolutions 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.
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Our experienced and award-winning Tax Resolutions team can help you navigate your COP8 case and ensure you meet your obligations.
Partner, Tax Resolutions
Partner, Head of Tax Resolutions