Following the closure in December 2015 of the Liechtenstein Disclosure Facility (LDF) there has been a rise in the number of investigations conducted by HM Revenue & Customs (HMRC) under Code of Practice 8 (COP8). Such investigations are solely undertaken by HMRC Fraud Investigation Service Unit (FIS).
The HMRC FIS unit will undertake COP 8 investigations where Fraud or dishonesty is not considered suspected or that involves what HMRC refers to as 'bespoke avoidance'. Any cases which HMRC believes is connected to 'Marketed Avoidance Schemes' is normally undertaken by the Counter Avoidance unit.
A COP 8 investigation can cover all types of taxes and cover a number of years irrespective of whether the time limit to open an enquiry into a return has elapsed or not. As part of a wider HMRC investigation, FIS may instead undertake a COP8 investigation into a specific limited issue with other HMRC teams dealing with other wider issues.
The issues or areas investigated under COP8 are wide ranging and can include:
- Whether a taxpayer is UK tax resident,
- Both UK and non UK Trusts,
- Assets held outside the UK,
- Central management and control of companies (which will determine where a company is resident for tax purposes),
- Offshore entities and structures,
- Application of UK anti avoidance legislation,
- UK complex property transactions (where tax avoidance is suspected),
- Annual Envelope Dwelling Tax,
- High profile individuals, entertainers, sporting figures, whose tax affairs are complex or not up to date or have failed to register for tax,
- Any bespoke tax planning where large amounts of tax appear to be at risk.
FIS will notify the taxpayer that it has commenced a COP8 investigation and normally sets out the reason for its investigation even though it does not need to do so. If FIS during their COP8 investigation suspect or find evidence of fraud they can choose to change their approach, which could either result in an investigation under Code of Practice 9 or a criminal investigation under the Police and Criminal Evidence Act 1984. FIS investigators may as part of their investigations seek information and documents from the taxpayer, third parties and overseas Tax Authorities.
COP8 investigations can therefore be very intrusive from both a business and personal perspective which may attract unwanted attentions and or potentially damage business and personal relationships and reputation. Appropriate skilled professional support is therefore highly recommended in any situation where HMRC conduct an investigation under COP8.
Mazars National Tax Investigations Group includes former HMRC investigators with extensive experience of the COP8 investigations in both HMRC and also private practice, and we have an excellent track record of obtaining successful outcomes for clients who have been investigated under COP8. Please contact us for a free of charge no obligation discussion if you are subject to a COP8 investigation to discuss how we can support you.
Please contact our team either by:
Sending a message via our Tax investigations national contacts
or phone on 020 7063 4639, 0161 238 9235 or 0121 232 9519