HMRC Code of Practice 8 vs 9 (2026/27)

Code of Practice 8 — suspected avoidance

COP8 is HMRC's civil investigation procedure for suspected tax avoidance, particularly:

• Use of disclosed tax avoidance schemes (DOTAS-registered) that HMRC believes don't work
• Promoted schemes involving offshore structures, EBT/EFRBS, contractor loan schemes
• Aggressive corporate restructurings
• Late-tested anti-avoidance applications (GAAR, TAARs)

Key features of COP8:

• Letter from HMRC's Fraud Investigation Service (FIS), Wealthy team, or specialist directorate
• Specifies the arrangement HMRC is challenging
• Invites your engagement and disclosure of all relevant facts
• No immunity from prosecution offered (because no fraud is suspected — yet)
• Penalties typically civil, but can escalate to COP9 if HMRC believes deliberate concealment

Most COP8 cases settle through negotiation, with the disputed arrangement unwound and tax/penalties paid.

Code of Practice 9 — suspected fraud

COP9 is HMRC's most serious civil investigation procedure, used where they suspect deliberate fraud. Critically, it offers an opportunity to avoid criminal prosecution via the Contractual Disclosure Facility.

Triggers for COP9:

• Significant suspected deliberate non-disclosure of income (offshore accounts, business cash, undeclared property)
• False expense claims or invoices
• Hidden assets or accounts
• VAT or PAYE fraud
• Cases that prosecution review has deemed appropriate for civil resolution

Receiving a COP9 letter is serious — it means HMRC's specialist team has reviewed evidence and concluded fraud is suspected. The letter typically:

• Issues from HMRC Fraud Investigation Service
• Offers the Contractual Disclosure Facility (CDF)
• Gives 60 days to accept the CDF offer
• If accepted: civil settlement with immunity from criminal prosecution for the disclosed matters
• If declined: HMRC continues investigation, possibly including criminal referral

The Contractual Disclosure Facility (CDF)

The CDF is the heart of COP9. Mechanics:

1. You sign an Outline Disclosure within 60 days of the COP9 letter, identifying all areas of suspected deliberate non-disclosure
2. You then prepare a full disclosure report, typically taking 6-12 months
3. HMRC reviews the disclosure and computes tax, interest, and penalties
4. Settlement is reached, typically with civil penalties up to 100% of the tax
5. In exchange: immunity from criminal prosecution for the matters disclosed

Critical points:

• Immunity only covers matters fully disclosed in the CDF report
• If HMRC later discovers undisclosed matters falling within the CDF period, immunity is lost
• "Full disclosure" is interpreted strictly — even small omissions can void the immunity
• You can have professional representation throughout — strongly recommended

The difference in stakes

The cost of getting professional advice

Professional representation in COP8/COP9 typically costs:

• COP8 (simpler case): £5,000-£25,000 in advisory fees over the investigation
• COP8 (complex scheme): £25,000-£100,000+
• COP9 (single tax year): £10,000-£30,000
• COP9 (multi-year, complex): £50,000-£500,000+

This sounds extreme but the stakes justify it. A typical COP9 case involves £100,000+ of tax and penalties. Professional advice usually saves multiples of its cost through:

• Accurate scoping of the disclosure to avoid unnecessary widening
• Strong drafting of the CDF Outline Disclosure
• Negotiating penalty at the lower end of the range
• Identifying defences (reasonable care, advice received in good faith)
• Avoiding criminal referral

What happens if you decline CDF

If you decline the CDF (or fail to respond within 60 days), HMRC's response options:

• Continue civil investigation: with no immunity, penalties at the higher end
• Schedule 36 information notices: formal requests for records under threat of penalty
• Asset freezing applications: in serious cases, HMRC can apply to freeze assets
• Criminal referral: to the Crown Prosecution Service via HMRC's Criminal Investigation Directorate

Criminal prosecution for tax fraud carries serious consequences: imprisonment (up to 7 years for cheating the public revenue), confiscation orders, disqualification from holding company directorships, reputational damage.

The "denying" trap

A common mistake: telling HMRC "I haven't done anything wrong" in response to a COP9 letter.

If you sign a CDF Outline Disclosure claiming there's nothing to disclose, and HMRC subsequently proves there was, the CDF immunity is gone AND you have a fresh charge of providing false information.

If you genuinely believe you've done nothing wrong, the right path is:

1. Engage professional advice immediately
2. Review the COP9 letter and HMRC's stated concerns thoroughly
3. Decline the CDF formally and engage with the ensuing investigation
4. Defend factually with full cooperation

Never sign a Certificate of Tax Position or CDF Outline making sweeping denials without rigorous review.

Common COP8/COP9 mistakes

• Treating COP8/COP9 like a standard enquiry. They aren't. The HMRC team handling them is specialist and prosecution-focused.
• Self-representing on COP9. The technical complexity, drafting requirements, and stakes mean self-representation is rarely the right choice.
• Missing the 60-day CDF window. The window is strict. Late acceptance is generally not allowed.
• Partial disclosure. "Full and complete" is essential for CDF immunity. Half-truths void the protection.
• Discussing the case publicly or on social media. Statements can be used in evidence.
• Disposing of assets while under investigation. Risks asset-freezing orders and additional charges.

Sources

• gov.uk — Contractual Disclosure Facility
• gov.uk — Code of Practice 8
• gov.uk — Code of Practice 9
• gov.uk — Civil investigation of fraud

Related HMRC enquiry content

• HMRC nudge letters explained
• HMRC compliance check (Section 9A enquiry)
• Code of Practice 8 vs Code of Practice 9
• HMRC settlement and disclosure routes
• HMRC response centre
• HMRC crypto nudge letters