Our firm was approached by a client from North London who was under a Code of Practice 8 tax investigation. The client had several businesses such as restaurants, takeaways, property development projects, etc. Prior to contacting us, the client was being represented by his former accountant who was unable to progress matters. HMRC were asking the client under Code of Practice 8 to provide information going back 20 years and had estimated a significant tax liability.
Having considered the client’s case in detail and obtaining an understanding of his background, we established that amongst many things, HMRC were mainly questioning the source of funding for several properties and businesses that were acquired by the client over the years given his modest levels of declared income. Upon further analysis and discussion with the client, we were able to evidence source of funding for these acquisitions. This was accepted by HMRC and we were able to satisfy them that the acquisition did not amount to undeclared income. Having clarified the main point, we were quickly able to satisfy other concerns raised by HMRC and the case was closed with a significantly lower tax liability compared to the initial assessment.
In our experience, Code of Practice 8 (COPP 8) tax enquiries are best handled by tax investigation specialists who have knowledge and the relevant expertise to deal with these enquiries. What we have seen is that a lot of people will initially have their accountants deal with the Code of Practice 8 tax enquiries who, due to their lack of experience will make matter worse. If instead, a tax investigation specialist such as ourselves is contacted at an early stage, we are able to conclude matters more efficiently and with the least possible tax implications for the clients.
If you are being investigated by HMRC or are going through a Code of Practice 8 tax enquiry or investigation, please feel free to call us on 0203 5000 853 to speak to one of our tax investigation specialist for a free and confidential consultation.