HMRC’s Code of Practice 8 is used for civil tax investigations, which may be conducted when the more severe Code of Practice 9 is not appropriate or in cases where there is no apparent dishonesty. Like taxpayers, take advantage of tax avoidance schemes to avoid tax. Such investigations aim to establish the facts and recoup any taxes, interest, and penalties owed.
If you received a letter from HMRC under Code of Practice 8, it means that Fraud Investigation Service has reviewed your tax return, accounts, and other sources and discovered wrongdoing. Therefore, they have decided to investigate further.
The letter describes the aim of their investigation and which areas they intend to focus on. However, they are not required to do so.
FIS inspector will invite you to a meeting to talk about the concerns and give you the chance to present your side of the story. HMRC expects you to be honest and forthright in your responses. It is your duty and responsibility to ensure that your answers are accurate to the best of your knowledge and belief. FIS inspector may decide to inspect your business’s records at your place of business.
During their investigation, HMRC has the power to bring charges against tax payer if they find evidence of fraud and deception. This may happen because there is no uniform format for a COP8 investigation – unlike COP9 – this may happen.
FIS inspector will request any information and documents it needs for the investigation. He will provide you with a reasonable time to submit whatever data you have.
Suppose the FIS inspector decides to pursue a financial settlement after an investigation. In that case, they will attempt to negotiate a settlement with you of the amount of tax, duties, interest, and penalties. According to what it has found during its research, HMRC believes you owe.
If the FIS inspector finds nothing wrong with your tax record, he’ll inform you that HMRC has finished the investigation.
If you disagree with the FIS inspector’s decision, you have 30 days to write and notify HMRC. This is referred to as an appeal to HMRC. You can also request a different officer from the one who made the decision to review your case before an independent tax tribunal. If you disagree with the review, you may appeal it to the tribunal.