HMRC’s Fraud Investigation Service uses two distinct civil procedures for its most serious cases: Code of Practice 8 (COP8) and Code of Practice 9 (COP9). They look superficially similar, both are run by the same directorate, both carry significant tax exposure, but the legal framework, the risk profile and the response strategy are fundamentally different. Getting that distinction wrong is one of the most expensive mistakes a taxpayer can make.
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The headline difference in one sentence
COP8 is used where HMRC suspects significant tax has been lost but does not (yet) allege deliberate fraud. COP9 is used where HMRC suspects deliberate fraud and offers immunity from criminal prosecution via the Contractual Disclosure Facility (CDF) in exchange for full disclosure.
Everything else, the procedural detail, the penalty differences, the strategy, flows from that distinction.
Side-by-side comparison
| Feature | COP8 | COP9 |
|---|---|---|
| HMRC’s suspicion | Significant tax loss, no allegation of fraud | Deliberate tax fraud |
| Issued by | Fraud Investigation Service (FIS) | Fraud Investigation Service (FIS) |
| CDF / immunity offered | No | Yes, immunity from prosecution for disclosed conduct |
| 60-day deadline | No | Yes, to accept or reject the CDF |
| Typical penalty range | 0% to 30% (careless) of tax | 35% to 100% (deliberate) of tax |
| Maximum assessment window | Up to 6 years (careless) or 4 years (innocent error) | Up to 20 years (deliberate) |
| Criminal prosecution risk | Low, but possible if fraud later established | Real, especially if disclosure is incomplete |
| Typical case length | 12–30 months | 9–18 months |
| Naming and shaming | No | Possible under the deliberate defaulters scheme |
When HMRC chooses COP8
COP8 is the procedure HMRC reaches for when the case is serious but the behaviour does not (yet) look deliberate. Typical examples:
- Marketed tax avoidance schemes. Film partnerships, employee benefit trusts (EBTs), contractor loan schemes and other DOTAS-notified arrangements. The user purchased a structured product with clear advice; HMRC says the product never worked.
- Bespoke avoidance planning. Large one-off planning involving offshore structures, hybrid entities or transfer-pricing arrangements where HMRC challenges the technical effectiveness rather than alleging concealment.
- Complex residence and domicile cases. High-net-worth individuals where HMRC believes UK residence or deemed domicile has been incorrectly claimed, and the tax at stake is substantial.
- Group reorganisations and corporate transactions. Demergers, share-for-share exchanges and substantial shareholding exemption claims that HMRC believes do not meet the statutory tests.
- Disguised remuneration follow-up. Loan-charge legacy matters and other PAYE-related arrangements where the technical analysis is contested.
The common thread: the taxpayer typically took advice, retained documentation and made disclosure (often via DOTAS reference numbers). HMRC disputes the outcome, not the honesty.
When HMRC chooses COP9
COP9 is reserved for cases where HMRC has built evidence pointing to deliberate behaviour. Typical examples:
- Suppressed cash takings. Restaurants, takeaways, taxi firms, hair salons, market traders, cash businesses where till data, supplier purchases and lifestyle do not reconcile with declared turnover.
- Omitted income. Undeclared rental properties (especially short-let platforms), unreported consultancy work, undisclosed share dealing, undeclared director loan write-offs.
- Undisclosed offshore assets. CRS data showing accounts, investments or property held overseas that has never appeared on a UK return.
- Fictitious expenses. Invoices created for services not supplied, personal expenses run through a company, false subcontractor payments in CIS.
- VAT fraud. Missing trader, carousel and suppressed-output VAT cases where the pattern looks systematic rather than mistaken.
- Inheritance tax under-reporting. Deliberate undervaluation of estates, omitted lifetime gifts or sham loan-back arrangements.
The defining feature: HMRC believes someone made a conscious choice to under-report. For a detailed treatment of how HMRC defines that conscious choice, see our guide to deliberate behaviour.
The role of the Fraud Investigation Service
Both COP8 and COP9 are run by HMRC’s Fraud Investigation Service (FIS), the unit responsible for HMRC’s most serious civil work alongside its criminal investigations. FIS officers are more senior, more experienced and have access to broader powers (including covert intelligence channels) than the inspectors in standard compliance offices.
The key difference is which FIS team is allocated:
- COP8 cases are typically run by FIS’s civil-only specialist enquiry teams.
- COP9 cases are handled by teams with closer links to FIS’s Criminal Investigation directorate, ready to escalate if the CDF is rejected or if disclosure is materially incomplete.
Penalty regimes compared
Penalties under both procedures sit under Schedule 24 Finance Act 2007 (and the related onshore/offshore matrices), but the practical ranges differ significantly.
COP8 penalty range
Where HMRC accepts the behaviour was careless, the typical landing point for a defeated avoidance scheme, penalties range from 0% to 30% of the tax for unprompted disclosure, 15% to 30% for prompted. Where HMRC argues the behaviour was deliberate after all, the case has effectively become a COP9-style matter.
COP9 penalty range
Deliberate behaviour with prompted disclosure (the CDF default) carries a 35% to 70% range. Deliberate-and-concealed conduct: 50% to 100%. Where offshore matters are involved, ranges can multiply up to 200%. Our penalty calculator walks through the mechanics.
Criminal prosecution risk
In COP9 cases, prosecution risk is the central feature of the procedure. The CDF is, in effect, HMRC’s offer to take prosecution off the table in exchange for full disclosure and settlement. Reject the CDF when fraud has in fact occurred and prosecution risk rises sharply.
In COP8 cases, prosecution risk is much lower in absolute terms, the very reason COP8 is being used is that HMRC has not formed a view that fraud occurred. But prosecution is not impossible. If during a COP8 enquiry HMRC develops evidence of deliberate concealment, the matter can be re-opened under COP9 or referred to Criminal Investigation directly.
Time limits compared
The behaviour categorisation drives the assessment window under section 36 TMA 1970 and equivalents:
- Innocent error , 4 years
- Careless , 6 years (typical COP8 endpoint)
- Deliberate , 20 years (typical COP9 endpoint)
- Offshore deliberate matters , 12 years for “requires-correction” failure-to-correct cases, 20 years for deliberate offshore conduct
The leap from 6 years to 20 years is the single largest financial swing in a serious enquiry. It is why behaviour categorisation negotiation is so important.
When a COP8 becomes a COP9
HMRC retains the right to escalate. The typical escalation triggers we see:
- Discovery during a COP8 enquiry of documents inconsistent with the taxpayer’s narrative
- Third-party intelligence (whistleblower, ex-partner, SAR) indicating deliberate concealment
- Unexplained lifestyle or asset accumulation
- Material errors in the taxpayer’s factual representations during the COP8 process
When the upgrade happens, HMRC issues a fresh COP9 letter with its own 60-day CDF window. The taxpayer is back at square one, but now with an evidence base already built against them. This is the strategic reason why even an apparently “technical” COP8 case should be handled by a team alert to the COP9 risk indicators.
Strategic implications
The choice of procedure dictates the response strategy. In a COP8 case, the work is largely technical, defending a position with reference to statute, case law and the original advice. In a COP9 case, the work is primarily about scoping the disclosure correctly, demonstrating cooperation and negotiating behaviour categorisation downwards where the facts allow. For a deeper view of the COP9 process, see our pillar guide to Code of Practice 9.
Frequently asked questions
Is COP8 less serious than COP9?
COP8 cases do not allege deliberate fraud and do not carry the same prosecution risk as COP9. However, both are handled by HMRC’s Fraud Investigation Service and both involve substantial tax exposure. COP8 is “less serious” only in the narrow sense that HMRC does not at that point suspect deliberate fraud.
Can a COP8 investigation become a COP9?
Yes. If during a COP8 enquiry HMRC develops evidence pointing to deliberate behaviour, the case can be reissued under COP9 with a fresh 60-day Contractual Disclosure Facility offer. This “upgrade” is one of the key risks of mishandling a COP8 case in its early stages.
Does COP8 offer immunity from prosecution like COP9?
No. The Contractual Disclosure Facility immunity is unique to COP9. COP8 does not include a CDF or any equivalent contractual immunity. Prosecution risk in a COP8 case is lower because no fraud is alleged, but there is no contractual protection.
What are typical examples of COP8 cases?
COP8 is commonly used for marketed tax avoidance schemes (such as historic film partnerships, employee benefit trusts and contractor loan arrangements), complex residence and domicile enquiries and large bespoke planning that HMRC considers ineffective but not fraudulent. The behaviour at issue is aggressive avoidance rather than deliberate evasion.