Code Of Practice 8 (COP8)

A COP8 investigation is used to check the books and accounts of a business to determine if the correct amount of tax has been paid and the HMRC will use this to recover any tax, interest and penalties

If the investigation leads to the HMRC finding evidence of fraud then they may begin criminal prosecution.  If this happens, they will proceed with a Code Of Practice 9 (COP9) which, if found guilty, can lead to imprisonment.

 

Why do the HMRC investigate?

The HMRC will investigate the tax affairs of individuals, partnerships, limited liability partnerships (LLPs), companies and trusts if they think there is a serious loss of tax.  The HMRC has the powers to investigate all aspects of your tax affairs and start by requesting a tax audit.  The HMRC will ask third parties about your business and if you do not comply they could use legal powers.  If they use legal powers to contact suppliers, customers, banks and ex-employees then this could damage the reputation of you and your business.

It is your decision to co-operate with the HMRC but with strong representation from a tax investigation specialist this could speed up the investigation.  Failure to co-operate with the HMRC could incur higher penalties later down the line.

You may be asked to attend a face-to-face meeting which will also speed up the investigation rather than correspondence via letter.  Once again, always have a tax investigation specialist representing you and these meetings can be arranged at your home, business premises, HMRC office or your tax advisor’s office.  Notes will be taken in these meetings which you are entitled to a copy of for your records.

All information surrounding the tax affairs that you provide to your tax investigation specialist must be true and accurate as your advisor will generally be corresponding with HMRC on your behalf.

Once the HMRC has assessed the information supplied by your tax advisor they can decide whether to proceed under this Code Of Practice.  If they do you or your tax advisor will be notified by letter stating the reasons for the continued investigation.  If there are any issues that have been identified during the assessment then you will be asked to attend another meeting to explain their findings.

 

Concluding the COP8 Investigation

If the HMRC finds nothing wrong with your accounts and records then they will let you know that the investigation is over.

If they have found discrepancies then they will look for a financial settlement to cover the tax, duties, interest and penalties.  If the HMRC can not make an agreement with you then they can use all records submitted during the investigation in a tribunal to decide your liabilities to tax, other duties, interest and penalties.

Once the investigation has finished and you have accepted the tax, duties and interest to be paid, you could be asked to sign a Certificate of Full Disclosure declaring that all your taxable income gains, gains and other duties are correct.

You have 30 days to appeal this decision if you feel this is not correct.

With any tax investigation with HMRC, you should appoint a qualified and experienced tax investigation specialist.

Contact Tax Advisory UK today and we will arrange a meeting with some of the UK’s most qualified and experienced Tax Investigators to help with your COP8 enquiries.  Please call 07908 074954.