Code of Practice 8 (COP8) Investigations
Specialised HMRC Inquiry into Suspected Tax Avoidance

A Code of Practice 8 (COP8) Investigation is initiated by HM Revenue & Customs (HMRC) when they suspect that a taxpayer has engaged in tax avoidance — that is, the use of complex arrangements to gain a tax advantage that was not intended by law. These investigations are conducted by HMRC’s Fraud Investigation Service (FIS) under its Specialist Investigations division, specifically targeting artificial or aggressive tax planning structures.

While a COP8 investigation does not automatically imply criminal intent, it is nevertheless a serious matter that demands careful management. The consequences can include the loss of tax reliefs, large settlement demands, and in some cases, referral to Code of Practice 9 (COP9) or criminal prosecution if HMRC later concludes that deliberate tax evasion occurred.

At Holland & Co Chartered Accountants, we provide specialist representation and advisory services for individuals and businesses under Code of Practice 8 investigations, ensuring that every step of the process is handled professionally, strategically, and with full awareness of the potential risks involved.

Understanding COP8 Investigations

A COP8 inquiry is launched when HMRC suspects serious tax avoidance, but not necessarily fraud. Unlike a COP9 case, which involves deliberate dishonesty or evasion, a COP8 case focuses on the misuse of complex or artificial tax structures that may have been used to reduce liabilities unlawfully or outside the spirit of UK tax legislation.

HMRC typically initiates a COP8 investigation following:

  • Information received through third-party disclosures or whistleblowers.

  • Data analysis of tax returns showing anomalies or irregular relief claims.

  • Links to known tax avoidance promoters or scheme users.

  • Patterns of tax planning inconsistent with declared business activity.

Once flagged, HMRC’s Specialist Investigations team conducts a detailed review of all personal and business tax affairs, often extending across multiple years and tax types, including Income Tax, Corporation Tax, Capital Gains Tax, VAT, and Inheritance Tax.

Examples of Tax Schemes Targeted under COP8

Over the years, HMRC’s anti-avoidance teams have identified and challenged a range of tax planning schemes. Common examples include:

  • Share Loss Relief Schemes – used to create artificial capital losses to offset against taxable gains.

  • Employee Benefit Trusts (EBTs) – involving remuneration paid through trust structures to avoid PAYE and NIC.

  • Stamp Duty Land Tax (SDLT) Schemes – arrangements designed to understate or defer stamp duty liabilities.

  • Film Partnership and Investment Schemes – used to claim excessive losses or reliefs on investment activities.

  • Pension Contribution and Loan Schemes – exploiting tax reliefs through circular funding or disguised remuneration.

  • Inheritance Tax (IHT) Schemes – aimed at moving assets out of estates through aggressive trust or gifting structures.

HMRC’s objective in COP8 cases is to close loopholes, recover underpaid tax, and apply appropriate interest and penalties.

The Investigation Process

A COP8 investigation typically begins with an official letter of enquiry from HMRC’s Fraud Investigation Service. This letter outlines the scope of the investigation and requests detailed information, documents, and explanations.

The process can include:

  1. Initial Disclosure – HMRC will outline their concerns and request relevant documentation and explanations.

  2. Information Gathering – taxpayers are required to provide detailed accounts, contracts, correspondence, and supporting evidence.

  3. Meetings with HMRC – formal interviews may be held to clarify technical or factual matters.

  4. Technical Review – HMRC analyses whether tax law has been breached and calculates potential liabilities.

  5. Settlement Negotiations – where possible, a financial settlement may be reached to resolve the case and avoid litigation.

It is important to note that COP8 cases can escalate into COP9 if HMRC finds evidence of deliberate tax evasion. For this reason, professional representation from the outset is essential.

How Holland & Co Can Help

As experienced tax investigation specialists, we provide comprehensive assistance throughout the entire COP8 process. Our services include:

  • Initial Case Review – analysing the COP8 letter and identifying HMRC’s areas of concern.

  • Strategic Response Planning – advising you on how to reply to HMRC’s initial request for information.

  • Technical Tax Analysis – reviewing the schemes or structures in question to determine their compliance with tax law.

  • Representation and Negotiation – managing all correspondence with HMRC, attending meetings on your behalf, and negotiating fair settlements.

  • Disclosure Preparation – preparing full and accurate statements of facts to mitigate penalties and protect against escalation.

  • Penalty Mitigation – arguing reasonable care or professional reliance to reduce or eliminate HMRC penalties.

  • Post-Investigation Guidance – helping you restructure tax affairs to prevent future issues and maintain compliance.

Our proactive approach ensures that your case is handled discreetly, efficiently, and with the minimum possible disruption to your business and personal life.

Why Early Professional Advice Matters

Responding to a COP8 investigation without professional support can be risky. The wording of initial responses, the provision of documents, or even a single misstatement can significantly affect the outcome.

By engaging Holland & Co Chartered Accountants at the earliest stage, you gain:

  • Experienced representation from specialists familiar with HMRC’s Fraud Investigation Service.

  • Protection against escalation to COP9 or criminal prosecution.

  • A structured, strategic approach to disclosure and negotiation.

  • Confidence that all technical and procedural requirements are handled correctly.

Our goal is to safeguard your position, protect your reputation, and achieve the most efficient and favourable resolution possible.

Serious Consequences of Tax Avoidance

While COP8 investigations focus on civil recovery rather than criminal prosecution, the implications are still severe. HMRC may impose:

  • Repayment of all underpaid tax, plus interest.

  • Civil penalties of up to 100% of the tax due (or 200% for offshore matters).

  • Public naming under the “deliberate defaulter” regime in serious cases.

  • Referral to COP9 or criminal investigation if dishonesty is later established.

Engaging in aggressive or artificial tax avoidance schemes can also damage your professional reputation and financial standing.

Your Trusted Experts in COP8 Representation

At Holland & Co, we bring decades of experience representing individuals, directors, and businesses in HMRC investigations. We have successfully defended clients in Code of Practice 8 and 9 enquiries, ensuring fair outcomes and protecting them from unnecessary penalties.

Our in-depth understanding of both tax law and HMRC procedure allows us to manage even the most complex cases with confidence and precision. We act discreetly, firmly, and always in your best interest.

Contact us today if you have received a COP8 Investigation letter or have been approached by HMRC regarding a tax avoidance scheme. Early advice is critical — we will assess your situation confidentially, outline your options, and guide you through every stage of the process.

For further details, please refer to our FAQ section on COP8 Investigations, where we provide answers to common questions about timeframes, penalties, and settlement procedures.