HM Revenues and Customs can launch a code of practice 8 investigation if they have a reason to believe that a large amount of tax has not been paid either through the use of complex tax avoidance scheme or arrangements. HMRC will undertake the investigation to recover any tax, interest and penalties due. Although a COP 8 investigation is not initiated with a view to a criminal prosecution, HMRC may take a different approach if they suspect or find evidence of fraud at any time during the investigation. The COP 8 investigation is not treated as a tax fraud and is usually applied to cases that are not investigated under Code of Practice 9 which is considerably more serious such as tax fraud and can also lead to possible imprisonment.
HMRC will only contact you for a Code of Practice 8 investigation after doing an elaborate research involving considerable checks on you and your income, assets, bank transactions and connection with other people. Therefore, receiving a letter from HMRC stating that you are being investigated under the code of practice 8 must be taken very seriously as it can lead to grave consequences that can not only impact your professional life but also your personal life. Investigations under the COP 8 are viewed seriously and should be handled by practitioners who have significant experience of dealing with such matters at this level.
Penalties and liabilities
HMRC charges statutory interest on any tax that is paid late. Apart from that, they may also charge a penalty for:
- Failing to notify them of your liability to a tax
- Failing to make a return by the statutory filing date, or at all
- Carelessly or deliberately giving an inaccurate tax return or other specified documents
- Failing to correct, within a reasonable time, a mistake you notice in a tax return
- Failing to tell HMRC, within a reasonable time, that an estimated assessment to tax is inadequate
- Failing to pay on time
Why should you cooperate with HMRC while being investigated under the Code of Practice 8?
HMRC initiates a COP 8 enquiry against you if they do not wish to apply Code of Practice 9 as yet. However, things may take a turn if you refuse to make the process smooth for HM Revenue and Customs by withholding information or by not cooperating.
If you are subject to an HMRC investigation, it is in your best interests to get in touch with a solicitor at your earliest convenience and we will deal with your case throughout the entire legal process.
Why should you seek professional advice?
Her Majesty’s Revenue and Customs (HMRC) is a non-ministerial department of the UK government that administers various financial responsibilities, most notably the collection of taxes. The department is responsible for the administration and collection of various taxes including income tax and corporation tax while also helping families and individuals with targeted financial support such as the distributions of tax credits including child benefits.
While the investigation is not carried out with the implication of a criminal investigation, it may take a turn if the issue is handled carelessly. A letter by HMRC stating that you are being investigated under Code of Practice 8 should be treated seriously as HMRC will usually believe a large amount of tax is at stake.
Cases involving a large sum may be complex and involve intricacies that should be dealt with carefully. A professional advisor can help you to understand the scope of HMRC’s powers and the information they are able to request from the outset. We take a personal approach and guide you throughout the entire process. We clarify complex issues so that you are kept fully informed throughout the process.
How can we help?
If you have been contacted by HMRC then our Tax Defence Solicitors are available to argue your case and advise you throughout the entire process. Our investigation specialists and have significant experience in dealing with and successfully closing such enquiries. Once appointed, our team of specialists will:
- Advise you on the merits of the case, strengths, risks and possible tax liabilities
- Start formal communication with HMRC and take full control of the Code of Practice 8 tax enquiry
- Carefully review the case
- Hold meetings with you and your existing accountant to discuss the case and information to be provided to HMRC
- Agree a time scale and action plan with HMRC
- Carefully negotiate the lowest possible tax liability and penalty with HMRC
Do not take a letter from HMRC stating that you are being investigated for unpaid tax on undeclared income lightly. This can lead to serious consequences and disrupt your personal and professional life.