HMRC conducts a wide range of enquiries into taxpayers’ affairs, from simple checks to full-scale fraud investigations. The HMRC Fraud Investigation Service (FIS) normally carries out the most serious enquiries, which can take considerable time and cause you significant stress.
Going through an HMRC investigation can be a difficult and costly process. Getting the right help not only makes this process a lot smoother, but it can also reduce the overall financial costs.
We support taxpayers, including individuals, trusts, companies and partnerships, through a broad range of HMRC investigations. Using our extensive experience and knowledge of the process, we provide bespoke tax investigation advice to help you achieve the best possible outcome.
HMRC's powers and penalties
- HMRC enquiries
- Code of Practice 9
- Code of Practice 8
- Cross-tax checks
- Information requests
- HMRC penalties
HMRC enquiries
Whether a tax return has been submitted by a company, individual, trustee or any other taxpayer, HMRC has the right to check whether the return is correct.
HMRC may have concerns that a specific transaction or source of income is incorrect, or it may believe a specific source has been excluded.
It is important to carefully manage an HMRC enquiry from the outset and to conclude the enquiry as efficiently as possible.
Code of Practice 9
If HMRC suspects that a taxpayer has committed tax evasion, it may undertake a tax fraud investigation. As part of this, the taxpayer will be invited to make a disclosure using the Contractual Disclosure Facility (CDF). These disclosures are made under Code of Practice 9 (also known as COP9). If managed appropriately, they offer the taxpayer protection against criminal prosecution in exchange for their full co-operation.
Alternatively, taxpayers can voluntarily register to make a COP9 disclosure, without the need for an HMRC investigation. As well as immunity from criminal prosecution, this proactive approach can help mitigate penalties.
By agreeing to make a disclosure under COP9, the taxpayer must admit to deliberately committing tax evasion and agree to make a complete and accurate disclosure to HMRC. HMRC can carry out a criminal investigation that could result in prosecution and conviction if any of the following apply:
- The taxpayer refuses an offer to make a COP9 disclosure.
- Incorrect information is provided.
- The process is not suitably managed.
HMRC COP9 investigations often involve a significant tax exposure.
Code of Practice 8
HMRC may launch an investigation under Code of Practice 8 (COP8) if it believes there is a loss of tax because of complex tax planning or other tax avoidance. The aim of a COP8 investigation is to establish the facts and recover any tax, interest and penalties due.
If HMRC finds evidence of fraud, it may be escalated either to COP9 or to an investigation under the Police and Criminal Evidence Act 1984.
Cross-tax checks
HMRC enquiries require a significant amount of HMRC resource and the decision to open such investigations is risk-based. HMRC will have a specific tax compliance concern and may undertake extensive and time-consuming checks.
There is a high level of coordination within HMRC. An initial focus on corporate tax may well lead to a review of the financial affairs of the company directors and shareholders and may expand to a review of other taxes. For this reason, it’s important to take expert advice straight away.
Information requests
HMRC officers may ask for a wide range of information and documents during an enquiry. There are no restrictions on what could be requested on an informal basis. However, there are restrictions in place as to what documents and information HMRC could oblige a taxpayer to provide.
COP9 investigations can be particularly intrusive, and while HMRC has a duty of taxpayer confidentiality, it may need to request information and documents from third parties.
Seeking guidance on managing formal and informal information requests is essential.
HMRC penalties
HMRC may impose a penalty if, during the course of an enquiry or investigation, it finds that a taxpayer has committed an offence. Such offences are typically linked to the submission of an incorrect return or the failure to notify HMRC of the requirement to file a return.
Whether a penalty is due, and the size of that penalty, is dictated by the behaviour that led to the offence. The taxpayer’s conduct during the course of the enquiry is also a factor in determining the final penalty.
Proactively approaching HMRC can result in reduced exposure to penalties.
How we can help resolve HMRC investigations
If you receive a letter from HMRC in relation to an enquiry or suspected tax offence, or you are dealing with the consequences of an HMRC investigation, we can help.
Our team includes chartered tax advisers and fully qualified HM Inspectors of Taxes, and we have significant experience in dealing with HMRC investigations, including those coordinated by the FIS. We can advise you throughout the process.
To speak with us in confidence about your situation and how our specialist team can help you, please call us on +44 (0)800 032 8374.





