A Code of Practice 8 (COP8) investigation is carried out by HMRC’s Fraud Investigation Service where HMRC believes significant tax may have been lost, typically through an avoidance scheme or a bespoke arrangement, but is not (yet) alleging fraud. It is HMRC’s most serious civil investigation short of the COP9 fraud procedure, and it can be reclassified as COP9 if evidence of fraud emerges.
COP8 cases are rare compared with ordinary compliance checks, but they are handled by HMRC’s specialist investigators and routinely run for years. The professional fees involved in defending one properly are substantial, which is why the distinction between an ordinary enquiry, a COP8 investigation and a COP9 investigation matters to anyone who receives the opening letter.
What is Code of Practice 8?
COP8 is the code of practice HMRC issues when the Fraud Investigation Service investigates a case where it does not suspect fraud, but does believe there is a significant loss of tax. HMRC’s own code says it is used where someone has taken “advantage of a scheme or device to reduce a tax liability”. Typical triggers are marketed tax avoidance arrangements, complex offshore structures, and bespoke planning that HMRC believes does not work.
The investigation is civil, not criminal. HMRC’s aim is to establish the facts, recover the tax it believes is due, together with interest and, where appropriate, penalties.
What is the difference between COP8 and COP9?
COP9 is used where HMRC suspects serious tax fraud, and it comes with the Contractual Disclosure Facility: an offer of immunity from criminal prosecution for the tax fraud disclosed, in exchange for a complete and honest disclosure. COP8 carries no such offer because fraud is not being alleged. That cuts both ways. A COP8 investigation is less grave on its face, but there is no immunity on the table, and HMRC states in the code that it “may take a different approach if we suspect or find evidence of fraud at any time during our investigation” and may then deal with the case under COP9. Anything said or produced during the COP8 stage will follow the case.
Who carries out COP8 investigations?
The Fraud Investigation Service, HMRC’s specialist directorate for the most serious compliance work. This is not a local compliance officer running an aspect enquiry. FIS investigators handle a small caseload of high-value cases and have HMRC’s full information powers behind them, including Schedule 36 information notices.
What happens during a COP8 investigation?
HMRC opens with a written notice identifying the issues under investigation. There will usually be a request for records and often an invitation to a meeting, of which HMRC keeps a documented record. The code expects the taxpayer to keep all business and personal financial records during the investigation, to keep filing returns by the statutory dates, and to give answers that are correct to the best of their knowledge and belief. A false statement during a COP8 investigation can itself trigger criminal prosecution. HMRC may also ask for a payment on account of tax it considers due.
Do I need professional representation for a COP8 investigation?
The code itself notes that appointing a professional adviser is optional. In practice, almost nobody should face the Fraud Investigation Service without a specialist. The subject matter is usually complex, the stakes are high, the investigation can move to COP9, and the way facts are presented early shapes everything that follows. The right team is typically the existing accountant working alongside a tax investigations specialist.
How long does a COP8 investigation take?
There is no fixed timetable. Because these cases involve complex structures and large amounts, they commonly run for well over a year and often several. Professional fees accumulate over that whole period.
Where tax investigation insurance fits
Fee protection insurance covers the professional costs of responding to HMRC interventions, so the decision to defend a position properly is not driven by the cost of advice. Cover terms differ between schemes on the most serious investigation types, including COP8 and COP9, so it is worth checking the policy wording rather than assuming. Solar Protect’s tax investigation policies are arranged through accountants; if your practice wants to protect its clients, see our accountants’ scheme, or get a quote.
Related reading: COP9 and the Contractual Disclosure Facility, discovery assessments, and Schedule 36 information notices.