HMRC’s Code of Practice 8 (COP8) explains how the Fraud Investigation Service (FIS) at HMRC carry out civil investigations. The COP8 applies to all investigations where the Contract Disclosure Facilities (Code of Practice 9) are not used.
COP8 is commonly used where HMRC has suspicions that the wrong amount of tax has been paid, for example where taxpayers have taken advantage of a scheme or device to reduce or eliminate a tax liability that might otherwise be due.
This approach is aimed at financial recovery of any tax, interest and penalties that are owed and investigations under COP8 are not carried out with a criminal prosecution in mind. However, HMRC may use a different approach if they suspect or find evidence of serious fraud at any time during their investigation.
This mechanism can be used wherever there is a significant loss of tax and applies to the tax affairs of individuals, partnerships, companies and trusts. The taxes concerned cover all taxes, duties, levies and contributions for which HMRC is responsible. In the COP8 document, HMRC recommends that taxpayers approach a professional adviser to represent them during the investigation.