COP8

Code of Practice 8 (COP8) Investigations

A COP8 enquiry is conducted by HMRC’s Fraud Investigation Service but does not allege fraud. Understanding that distinction is the starting point for responding to it correctly. It occupies a middle ground, which is why it is frequently misread.

Code of Practice 8 is the route for complex, high value cases such as avoidance arrangements, offshore structures and sophisticated planning, where HMRC believes a significant amount of tax may be at risk and wishes to apply specialist scrutiny. A COP8 enquiry can be escalated to Code of Practice 9 at any point if HMRC’s view of your behaviour changes.

What typically gives rise to a COP8 enquiry

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Participation in a marketed avoidance scheme, including historic arrangements

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Offshore structures, trusts or non-UK entities where HMRC questions the tax analysis

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Residence and domicile positions that HMRC does not accept

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Complex corporate reorganisations or transactions where the tax treatment is contested

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Large or unusual claims and reliefs

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Cases where HMRC suspects a substantial loss of tax but holds no evidence of deliberate conduct

What the process involves

The Fraud Investigation Service will typically issue information notices, request meetings, and work through the technical position in detail. These investigations run for some time, often well over a year, because the underlying arrangements are complex and HMRC is building a full technical picture rather than checking a single figure.

Two features of the process matter more than clients generally expect.

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There is no automatic protection from escalation

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Code of Practice 8 expressly reserves HMRC’s right to move to Code of Practice 9, or to a criminal investigation, if evidence of deliberate conduct emerges. Everything said and provided during a COP8 enquiry is said and provided against that background.

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The technical argument is the case

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Unlike a fraud investigation, which turns on facts and behaviour, a COP8 enquiry usually turns on whether the tax analysis is correct. That means it can be won on the technical merits, and the quality of the technical representation has a direct bearing on the outcome.

How we act on a COP8 enquiry

We take over the correspondence, manage the flow of information, and build the technical case properly.

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Scoping the enquiry
Establishing what HMRC is examining, which is not always what the opening letter indicates.

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Managing information notices
Schedule 36 powers are broad but not unlimited. Requests routinely exceed what HMRC can lawfully require, and complying with an overreaching notice sets a precedent for the remainder of the enquiry.

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Building the technical position
Legislation, case law and HMRC’s own published guidance, set out in a form that HMRC must engage with.

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Monitoring escalation risk
Where anything in the file could be read as indicating deliberate conduct, we would rather identify it early and plan accordingly.

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Resolution
Whether that is HMRC closing the enquiry, a negotiated settlement, alternative dispute resolution, or an appeal to the First-tier Tribunal.

Our COP8 experience

Our team has advised on numerous COP8 investigations involving bespoke and marketed avoidance.

Frequently asked questions

Is COP8 less serious than COP9?

In terms of what is alleged, yes, because there is no allegation of fraud. In terms of the amounts at stake, often not.

Can I answer HMRC’s questions myself?

You can, and in a straightforward case you may choose to. The Fraud Investigation Service does, however, assign experienced investigators to technical arguments, and responding without equivalent expertise puts you at a disadvantage.

How long will it take?

Longer than most clients expect. One to two years is common, and longer where the arrangements are complex or third parties are involved.

What happens if HMRC switches to COP9?

The position changes materially and quickly. That is one of the main reasons to have specialist representation in place from the start.

Get in touch

The first consultation is free, confidential and carries no obligation.

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mail@braceys-accountants.co.uk

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01462 413249

Or book a free 30 minute consultation online.

Code of Practice 9

HMRC Fraud Investigation

Criminal Tax Investigations