What is a Code of Practice 8 letter?

Code of Practice 8, often shortened to COP8, is used by HMRC's Fraud Investigation Service when it suspects a significant amount of tax has been lost, but the case doesn't fit the Code of Practice 9 route reserved for suspected deliberate fraud. It's commonly used for cases involving tax avoidance schemes, complex offshore structures, or arrangements HMRC considers artificial.

Receiving a COP8 letter is a step up in seriousness from a standard compliance check. It signals that a specialist HMRC team, rather than a general caseworker, is handling the matter, and that the sums or issues involved are considered material enough to warrant that level of attention.

Importantly, a COP8 case does not automatically mean HMRC believes you've acted dishonestly. It can apply to legitimate but aggressive planning that HMRC disputes on technical grounds, as well as to genuine errors that turn out to be larger than a routine check would cover.

The key distinction is intent. Code of Practice 9 is used specifically where HMRC suspects deliberate, serious fraud, and it comes with the Contractual Disclosure Facility, a formal process offering immunity from criminal prosecution in exchange for a complete and accurate disclosure. Code of Practice 8 does not carry that same fraud allegation or the criminal prosecution backdrop.

That said, if HMRC uncovers evidence of deliberate fraud during a COP8 case, it can switch the case to Code of Practice 9. This is one reason COP8 cases should still be treated seriously and handled with proper representation from the start, even though the initial framing is less severe than COP9.

Both processes sit well above the level of a routine compliance check, and both typically involve dedicated HMRC specialists rather than a general enquiry caseworker.

HMRC will usually request detailed information about the arrangements or transactions in question, and may ask for meetings to discuss how a scheme or structure worked. The investigation can cover multiple tax years and, where behaviour is found to be careless or deliberate, HMRC's assessment time limits extend well beyond the normal four-year window.

Where HMRC concludes tax was underpaid, penalties can apply depending on how the behaviour is categorised, ranging from lower rates for careless, prompted disclosures up to much higher rates for deliberate and concealed behaviour that wasn't voluntarily disclosed.

Throughout the process, you retain the right to make representations, provide evidence, and negotiate the final settlement. This is not a process to navigate without support, given the technical and financial stakes involved.

COP8 cases often arise from company tax planning that has gone further than HMRC accepts, such as certain remuneration structures, loan arrangements, or offshore elements connected to the business. If you or your company has used planning that a promoter described as compliant, and HMRC has now challenged it under COP8, get specialist advice promptly rather than relying on the original scheme provider's assurances.

COP8 cases are among the more expensive types of HMRC matter to run, given the technical detail, potential tax at stake, and time involved. Specialist representation is generally essential rather than optional.

Growth plan clients get tax investigation insurance as standard, which can cover professional costs for a COP8 investigation depending on the policy terms. Speak to us or see /fees for how cover works.

Don't assume a COP8 letter means the same as a routine compliance check; the process and stakes are different.

Don't rely on the original scheme promoter for advice on defending an HMRC challenge to their own scheme.

Don't delay getting specialist tax investigation advice once a COP8 letter arrives.