COP8 & COP9 HMRC Investigations-By Specialist Accountant

What are COP8 and COP9 HMRC Tax Investigations?

Having been a prominent tax accountancy firm in London & Birmingham for over 10 years, we’re no stranger to COP8 and COP9 HMRC investigations. Understanding and interpreting tax law and its many acronyms can be a daunting and difficult task for those not up to speed with their accountancy knowledge. In nearly all cases, responding quickly and clearly to HMRC investigations can help you when it comes to matters of settlement or future decisions to pursue in the criminal courts. With this in mind we’ve put together our own personal views and guidance on two of HMRC’s most important Code of Practices – or COPs – COP8 and COP9.

Code of Practice 8 (COP8) HMRC Investigation

What is COP8?

COP8, or Code Of Practice 8, is an investigation in regards to the recovery of taxes that the HMRC believes you may owe. The amount of money is usually quite high (traditionally the minimum starts from £500,000) in a COP8 investigation and normally targets individuals and businesses where tax avoidance schemes or less-than-ordinary tax schemes have been put in place. A COP8 investigation doesn’t necessarily mean that HMRC is making a formal allegation of tax avoidance, but rather a serious investigation to unearth whether there’s any evidence of tax avoidance. If evidence is found, then a COP8 can quickly be converted into a COP9 investigation and potentially a criminal investigation further down the line. As such, COP8 investigations should be dealt with the highest priority and seriousness.

What happens during a COP8 investigation?

The majority of a COP8 investigation is spent collecting and analysing data and information. This usually means that the HMRC will require you to provide communications or information around any tax schemes or arrangements you’ve had historically. As such, sifting through records can be a time-consuming task causing COP8 investigations to be incredibly prolonged and arduous. HMRC will usually recommend you seek professional tax accountancy advice on receipt of a COP8 notification. Experienced tax accountants like ourselves can help attend meetings you have with HMRC, draft communications to HMRC and provide you with advice about how you should resolve the investigation.

Code of Practice 9 (COP9) HMRC Investigation

What is COP9?

Code of Practice 9, or COP9 for short, is the next stage to a COP8 investigation if HMRC have discovered enough evidence to suspect tax fraud. A COP9 notice will offer the suspected taxpayer an option to admit guilt and pay the tax owed along with a civil penalty. If paid in full, HMRC may not pursue for a full criminal investigation. COP9 is unsurprisingly, a high risk and difficult investigation to navigate alone so you should always look to seek representation and help from an experienced tax accountant. Failure to provide the right information or any efforts to try conceal or mislead the HMRC during this process would result in a full criminal investigation.

What happens during a COP9 investigation?

A COP9 notice shouldn’t be a surprise to you if you’ve already have notification of a COP8 investigation. On receipt of a COP9 letter, you will be given 60 days to respond and will require to make a full and open disclosure of deliberate and non-deliberate behaviour. Individuals can make a full disclosure and agreement to co-operate using the Contractual Disclosure Facility (CDF). Quicker and better co-operation with the HMRC could see a reduced penalty due. Co-operation may also give you a chance of avoiding publication of your personal information should you wish to avoid embarrassment.

Why should I speak to a tax accountant if I receive a COP8 or COP9 letter?

Specialist advice is essential, particularly you want to protest any wrongdoing or irregularities with your tax arrangements. The 60 day deadline to respond to COP9 means that you need to ensure whoever is communicating with HMRC is aware of the regulations and investigation steps. As a long-standing tax accountant we’ve dealt with numerous tax investigations over the years and can help you respond quickly and correctly.

What triggers a COP9 investigation?

There are a number of reasons why HMRC might decide to launch an investigation into your tax arrangements but some most common reasons are:
  • Tax submissions show an income that doesn’t correlate to a lifestyle
  • HMRC information that shows income hasn’t been included in a tax submission
  • HMRC’s ‘Connect’ computer system has flagged up discrepancies between information submitted in your return and data from huge databases of commercial and personal information including Social Media
  • Errors or discrepancies in your self-assessment tax return
This data is automatically compiled and then sent to a member of HMRC’s Specialist Investigations team who will take on the case. They will lead interviews, analysis and all communication in order to try best investigate the tax arrangements. If you appoint a specialist tax accountant such as The Account Solutions, we can often help with representation and communication on your behalf.

What’s changed recently in regards to COP9 investigations?

Until June 2014, many individuals chose an option to co-operate but deny the allegations under COP9. However, the option to respond to “denial with co-operation” has since been removed meaning that the individual in question must admit or deny fraudulent activity from the start. Making this decision is therefore a crucial milestone in the investigation and shouldn’t be undertaken without expert guidance.

What happens if HMRC judge against you?

If a HMRC tax investigation finds that you have made deliberate actions to avoid tax, then there are likely to be severe penalties and punishments put in place such as:
  • A criminal investigation will be opened against you in the court of law – note that HMRC does not even need to inform you they have opened a criminal investigation against you
  • You will be ordered to repay the sum of money owed, interest and any penalty fees set out by HMRC
  • Publication of details such as name, address and liabilities due on the HMRC website for no less than a year – this could have a huge impact on you and your businesses reputation

How can The Accountancy Solutions help you in the event of a tax investigation?

Seeking expert advice is critical to avoiding further delays, costs and even potential criminal investigation. We can help individuals and businesses in the London and Birmingham areas with their tax investigations on tasks such as:
  • Submission of evidence to HMRC in the correct format and structure
  • Collating data, communication and information to help with HMRC’s investigation and requests
  • Negotiation of final settlements and payment plans to HMRC
  • Liaison with previous accountancy firms to analyse historical taxation arrangements and documentation
  • Most importantly, explaining the COP8 and COP9 process to you in a clear, helpful and honest way so that we can make the right decision for you

I’ve received a COP8 or COP9 letter what should I do next?

If you have received notice of investigation then please get in touch with us immediately so that we can help understand your situation and provide the very best advice. If you have received a COP9 notice then time is of the essence due to the 60 day response deadline. Contact us on 01216297768 or 02070784001 and we can start arranging your representation for the impending HMRC tax investigation.