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What are COP8 penalties?


The requirement to correct legislation also introduces significantly higher penalties for people who have accounts offshore where they get their tax affairs wrong (whether intentionally or accidentally).

Where HMRC decide to enquire into the tax affairs of someone with overseas links then they will generally do this under Code of Practice 8 as their suspicion will be that the person has undertaken some form of planning to mitigate their UK tax exposure and to take advantage of their domicile or residence position.  Often people will have instigated legitimate tax planning which is not updated and due to changes in the law now no longer works.  There are usually significant sums potentially at stake and it is important (and stressed in the leaflet COP 8) that people take professional advice.

It should be stressed that COP 8 has no legal construct and that it does not provide HMRC with any special powers and therefore HMRC should be held to what the law says that they can and cannot do.

The COP 8 leaflet suggests that an individual should provide HMRC with all of the information they require, meet with HMRC to discuss matters at an early stage to enable HMRC to ask questions and clarify points.  This is not always the best approach as it can lead to long and intrusive tax investigations and unfortunately HMRC generally look for evidence to support their view rather than forming a view after objectively reviewing the evidence.

HMRC state that generally as part of the COP 8 procedure they will tell the individual the reasons for starting the investigation.  This is true but the explanation is usually very vague and open to interpretation.

If, as part of the COP 8 process HMRC come to the opinion that an individual has deliberately not paid sufficient tax and knew that the tax returns were incorrect when submitted they potentially will withdraw COP 8 and issue Code of Practice 9 (cases of suspected tax fraud) or at worst decide to prosecute the individual.

Read more about Code of Practice 8 (COP8).

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Here to help, not to judge
Tax Investigation Specialist
Scott Gilbert, Partner and Tax Investigation Specialist

"We understand that people sometimes make mistakes in their dealings with HMRC and that HMRC make mistakes in dealing with taxpayers. Many people do not know how to deal with HMRC or who to turn to for help resolve the tax dispute.

Our firm of tax advisors specialise in resolving people's problems with HMRC. We have extensive expertise in dealing with all forms of tax investigations and tax disputes as well as with taking matters to the Tax Tribunal where agreement cannot be reached.

We deal both directly with the individual who is under enquiry and also work with many firms of accountants supporting them in dealing with HMRC disputes and advising them on how to handle HRMC to get the best result.

The fact is that proper management of HMRC is the best way of reducing the tax, interest and penalty as well as the time taken in resolving any tax dispute.

Our expert team are none judgemental and rigorously defend your position within the scope and parameter of the law. We take control and manage the process to minimise the interruptions that any form of tax investigation causes to an individual's life and business."