Code of Practice 8 Investigation

A Code of Practice 8 (COP 8) investigation is the HM Revenue & Customs (HMRC) process for formally investigating suspected serious tax fraud and evasion. Where HMRC has reasonable grounds to suspect a taxpayer may have engaged in deliberate and concealed cheating of the tax system, they can launch a criminal investigation under COP 8 to establish if an offence has been committed.

HMRC may investigate taxpayers for COP 8 if they suspect deliberate attempts to evade taxes. This includes significant unexplained wealth, offshore bank accounts, contrived tax avoidance schemes, poor accounting records, whistleblowers, and repeated non-compliance.

The COP 8 investigation process involves several stages, including initial suspicion, notification to the taxpayer, evidence gathering, interviews under caution, and a case review. If the evidence supports it, the FIS may recommend prosecution, leading to a trial and penalties if the taxpayer is found guilty. It’s important to note that the taxpayer is formally interviewed under caution during the interviews and should be aware that silence can be used against them. Sometimes, the taxpayer may settle by admitting to the fraud and repaying all taxes owed.

The duration of a COP 8 investigation can vary substantially depending on the offences and complexity involved. Some relatively simple cases may conclude in around a year. However, where multiple connected parties are under investigation, extensive documentation to gather and review, large sums offshore, and delays agreeing on prosecution or settlement, the process often takes several years from initial suspicion to the outcome. The timeframe also depends on current workload levels within HMRC’s Fraud Investigation Service. Resource constraints have occasionally delayed the progression of some COP 8 cases.