CODE OF PRACTICE 8

A Code of Practice 8 (COP8) enquiry is carried out by HMRC’s Fraud Investigation Service where they suspect tax fraud or bespoke avoidance has been undertaken and they wish to recover the tax outside Code of Practice 9 (COP9).

COP8 is carried out on a civil basis but if HMRC suspect serious fraud during the course of their investigation then they will deal with the investigation under COP9 or, in some cases, will seek to criminally prosecute.

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

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

If you or your client receives a COP8 notification letter from HMRC, it is therefore 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.

HMRC will usually expect to meet with the taxpayer face-to-face – we would strongly advise that the client does not do so without 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 letter?

If HMRC’s FIS team 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 letter, HMRC will have undertaken substantial work to verify the data that they hold. HMRC believe that there has been an underpayment of tax and that this underpayment would have either arisen due to bespoke avoidance, or fraudulently evaded.

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

HOW CAN LANCASTER KNOX HELP?

At Lancaster Knox our Tax Investigation specialists are industry recognised and have made hundreds of tax disclosures to the UK authorities over the years.  We are adept at managing interactions with HMRC to ensure that the process runs smoothly and that the client’s interests are best protected.

We also appreciate that, often, this is the first tax disclosure that the client has ever made and voluntarily approaching HMRC can be a nerve-wracking experience.

Lancaster Knox will work with you, and your current adviser where relevant, to ensure that HMRC do not seek to obtain information they are not entitled to, that the process is as unobtrusive as possible and to give you peace of mind that any historical tax inaccuracies are resolved as soon as possible.