A Code of Practice 8 (COP8) investigation is carried out by HMRC’s Fraud Investigation Service (FIS) where they suspect tax fraud or tax avoidance has been undertaken and they wish to recover the large loss of tax.

A COP8 is carried out on a civil basis but if HMRC suspect serious fraud during the course of their investigation then they can deal with the investigation under Code of Practice (COP9) or, in some cases, seek to investigate criminally with a view to prosecution.

It is highly important that care is taken with a COP8 investigation as, unlike COP9, there is no guaranteed protection from a criminal investigation.

As part of their investigations, HMRC will require sight of a large amount of records and they will not hesitate to approach third parties if the information is not forthcoming from the taxpayer. This can have serious reputational damage implications if HMRC write to your suppliers, customers, ex and current employers or banks, etc..

If you or your client receives a COP8 investigation notice from HMRC, it is very important that you seek professional advice as soon as possible to ensure that you engage with HMRC in a proactive manner, whilst ensuring your interests are protected and that HMRC are not seeking access to information they are not entitled to.

Failure to engage with HMRC will be considered to be an act of non-cooperation by the taxpayer and will have penalty implications later down the line, as well as encouraging HMRC to be more aggressive.

HMRC will usually expect to meet with the taxpayer face-to-face. We would strongly advise that the client does not do so without specialist professional representation. HMRC may also wish to visit your home if they suspect that part of your property is used in the business.

Why have I received this notice letter?

If HMRC’s FIS unit are investigating you, or your client, under COP8 rather than opening a compliance check, it means that they believe the case is serious, complex and, most likely, that the tax at stake is significant.

Before issuing the COP8 investigation notice, HMRC will have undertaken substantial work to verify the data they hold. HMRC will believe that there has been an underpayment of tax and that this underpayment would have either arisen due to tax avoidance arrangements, or fraud evasion.

Due to the seriousness of the situation and the lack of protection from prosecution, specialist advice is required upon receipt of the notice to ensure that the process is managed carefully.

How Cheylesmore can help you with COP8 investigations

At Cheylesmore Chartered Accountants, our tax investigation specialists are industry acclaimed. We are named a Leading Firm in Coventry. We are well versed in smoothly managing communications with HMRC to ensure that our client’s interests are protected.

Often, a Code of Practice 8 letter is the first negative experience with HMRC that our clients have had. We understand that this can be a nerve-racking process for our clients and those around them.