Will HMRC investigations increase in 2022?

by | Feb 7, 2022

We’ve seen an increase in COP8 and COP9 investigations by HMRC, especially since the launch of its fraud squad in April 2016. That’s being driven partly by more information sharing between global tax authorities and partly by scrutiny of COVID-19 support scheme claims.

Tax officials opened up tens of thousands of investigations against companies that claimed payments from the furlough scheme. More than 26,500  interventions have been launched by HMRC since spring 2021, according to a FOI request published in the Guardian.  That includes investigations into the self-employed income support scheme, plus the “eat-out-to-help-out” restaurant discount scheme.

The figures carry weight because HMRC had initially planned to target about 30,000 cases in total over a three-year period. The fact officials had already opened nearly as many cases last year suggests the total is likely to be much higher than the original target. And with HMRC having more technology at its disposal than ever before, the number of tax investigations in 2022/23 is almost certain to ramp up.

What’s the difference between COP8 & COP9?

COP8  investigations are carried out when HMRC suspects tax fraud or tax avoidance, and they wish to recover the large loss of tax.  A worst-case scenario, where serious fraud and dishonesty are discovered, can lead to criminal prosecution.

“As COP8 offers no protection from prosecution, it must therefore be conducted with specialist care,” said ABG tax director Dion Laycock . “Getting a COP8 investigation wrong can have a significant detrimental impact on a taxpayer. Always get specialist advice.”

COP9  investigations, on the other hand, are civil procedures used by HMRC where serious tax fraud is suspected, but they don’t want to bring a criminal investigation.

Tax investigation procedure

HMRC’s framework is much wider than the average tax investigation. You have S9A investigations, which are the usual full or aspect inquiries. Then there’s Schedule 36 information notices, where HMRC writes to you to request information or documents to check your tax position, and appeals.

After that, there’s the potential for counter avoidance investigations before the fraud squad gets involved with its COP8 and COP9 investigations. The worst cases can end up in a court of law. While we are not able to deal with prosecutions, we do have criminal solicitors who can assist.

Voluntary disclosures

If you’re concerned about your tax situation, you might want to consider a carefully managed voluntary disclosure. This is where you (or us as your accountant) tell HMRC about any unpaid tax on undeclared income or gains before they investigate you.

When we do this through the digital disclosure service, we also manage our clients’ relationships with HMRC all the way until the case closes. You usually have 90 days to submit the full disclosure from the point when you notify HMRC that you intend to make a disclosure.

At ABG, we offer a comprehensive tax investigation service, which includes representation in COP8 and COP9 investigations and voluntary disclosures. For more information about any of these issues or other HMRC investigation matters, email abglondon@abggroup.co.uk or call us on 020 7330 0000

Tell us about your business

Explore where you want to go, what you need to get there and how ABG can help.

ICAEW Chartered Accountants
Probate Accountants
International Accountants EAI members
BAS Approved Chartered Accountants