Lexicon Tax

Code of Practice 8 (COP8) Investigations

What is COP8 and how can Lexicon Tax help? Lexicon Tax help?

Our founder has over 20 years’ experience working in HMRC as well as having professional tax qualifications. All of our staff have either HMRC or an accountancy background.

HMRC’s Fraud Investigation Service (FIS) is responsible for opening COP8 tax investigations when they suspect fraud and underpaid tax through complex tax arrangements or structures. FIS officers are highly trained specialists who are skilled in challenging taxpayers’ tax affairs and pursuing the recovery of tax, interest, and penalties.

It can seem very daunting receiving one of these letters. But don’t panic. At Lexicon Tax we have tax dispute specialists who have he necessary knowledge and experience with some of our staff being ex HMRC FIS fraud investigators.

Unlike most HMRC enquiries that focus on a single tax year, COP8 investigations often involve an examination of historical periods and can extend to both personal and business tax affairs. These investigations may also include offshore aspects, which can introduce additional complexities to the case.

Given the complex nature of COP8 investigations and the expertise of HMRC’s FIS officers, it is essential to communicate through specialist representation. Engaging professionals with experience in handling tax investigations can help ensure that your interests are protected, provide guidance on navigating the investigation process, and assist in formulating the best strategy to address the concerns raised by HMRC.

Specialist advisers can help you understand the scope of the investigation, assess the potential risks, and develop a comprehensive response. They can also provide advice on dealing with any offshore aspects and ensure that all relevant information is properly disclosed and addressed during the investigation.

By working with specialist representation, you can have the support and expertise needed to navigate the complexities of a COP8 tax investigation and achieve the best possible outcome.

Frequently Asked Questions

Although it sounds similar to COP9, a COP8 investigation is often less serious. It is basically a fact finding investigation where HMRC suspect tax fraud. In essence, it is to determine the facts and establish who if anyone is involved in suspected tax fraud.

An extract from HMRC’s COP8 below gives a good overview;

Most customers pay what is due but some deliberately try to pay less than the correct amount or take advantage of a scheme or device to reduce a tax liability. If we suspect this, we will investigate under Code of Practice 8 to establish the facts to recover any tax, interest and penalties due.

We will not undertake this investigation with a view to a criminal prosecution but we may take a different approach if we suspect or find evidence of fraud at any time during our investigation

During a COP8 investigation, HMRC will examine the information it has and seek to determine whether there has been any undeclared income or gains. In some cases, the concerns raised by HMRC can be adequately explained and supported by evidence. However, if a significant amount of time has passed or there is limited evidence available, HMRC may make assumptions that could lead to the belief that additional taxes and penalties are due.

In such situations, it is important to challenge the validity of these assumptions and associated decisions promptly and robustly. This is where a specialist Tax Investigations & Dispute Resolution team can assist you. They can represent you and help challenge any unfair assessments of taxes and penalties made by HMRC.

If you are facing a COP8 investigation or have concerns about your tax situation, call Lexicon Tax to discuss how we can help.

It is true that during a tax investigation, HMRC may request certain documentation from you to establish whether there has been any underpayment of tax and to understand the factors that contributed to the underpayment. These requests for documentation can sometimes be extensive and burdensome.

If you are not knowledgeable about the tax system or lack confidence in challenging HMRC’s requests, there is a risk that you could find yourself subject to a prolonged and intrusive investigation, often referred to as a “fishing expedition.” In such cases, HMRC may take advantage of your cooperation and expand the scope of the investigation beyond what is necessary or reasonable, leading to further delays and complications.

Having specialists on your side during the enquiry can help protect your interests. They can ensure that HMRC does not unnecessarily expand its checks or make requests and decisions that are not in accordance with its own laws and procedures. Our expertise can help guide you through the investigation process, ensuring that your rights are respected and that HMRC’s actions are fair and within the bounds of the law.

Yes, HMRC has the authority to charge penalties in cases where there has been non-compliance with tax obligations. The penalty regime is designed to encourage compliance and deter taxpayers from underpaying or evading taxes. The specific penalties that can be imposed depend on the nature of the non-compliance and the relevant tax legislation.

COP9 is applied by HMRC in cases where they suspect fraud by individuals. It allows individuals to make a full disclosure of any deliberate errors or irregularities in their tax affairs in exchange for immunity from prosecution. This process gives taxpayers the opportunity to report their irregularities and disclose all relevant information.

In some cases, investigations initially opened under COP8 can be transferred to COP9 if deliberate behaviour is suspected or established. This transfer to COP9 provides the taxpayer with the benefit of immunity from prosecution, even if serious fraud is suspected from the beginning. It is important to note that under COP9, the taxpayer has the opportunity to make a voluntary disclosure and report their irregularities.

While COP8 investigations are driven by the FIS and can potentially result in penalties, it is a common misconception that someone under a COP8 inquiry can be charged deliberate penalties and referred for criminal investigation at any time. However, if you have knowingly submitted false returns and HMRC opens a COP8 enquiry, it is strongly recommended to consider making a voluntary disclosure under COP9. By engaging in the COP9 disclosure process and ensuring that the disclosure is accepted by HMRC, you may be granted immunity from prosecution.

How we can help?

If you find yourself under a COP8 tax investigation you should seek specialist advice promptly. Choosing to consult with a reputable firm like Lexicon Tax with ex HMRC FIS fraud investigators can make a big difference. Not all tax specialists have the ex HMRC staff.

Here are some ways in which Lexicon Tax can assist you:

If you’ve received a COP8, don’t delay as it could lead to more serious consequences. Contact Lexicon Tax today on 01144 000192 to arrange a free consultation to see how we can help.