Accountants for US and UK: HMRC Code of Practice 8 Letter

A Code of Practice 8 letter tells you that HMRC's Fraud Investigation Service has opened a civil investigation because it believes there may be a significant loss of tax, but that it is not alleging fraud. Unlike Code of Practice 9, COP8 offers no disclosure contract, no immunity, and no fixed window. It asks you to explain, not to admit.

For US-connected UK residents, that distinction is easy to misread. Accountants for US and UK see the same reaction repeatedly: the letter does not use the word fraud, so it is treated as a technical query and answered quickly, often by an adviser who has never seen a Fraud Investigation Service case. That response is what converts a manageable enquiry into an unmanageable one. COP8 is the code HMRC uses when its specialist investigators want the facts and have decided, for now, that the contractual route is not the right one. What you say in the first three months determines which footing the case ends on.

What is a Code of Practice 8 letter actually saying?

The published Code is short and unusually candid. HMRC states that most taxpayers pay what is due, but that some deliberately try to pay less or take advantage of a scheme or device to reduce a liability, and that where it suspects this it will investigate under COP8 to establish the facts and recover tax, interest and penalties. It then adds the sentence that governs everything else: HMRC will not undertake the investigation with a view to a criminal prosecution, but may take a different approach if it suspects or finds evidence of fraud at any time.

Read carefully, the opening letter contains four separate messages:

• Who is looking. The Fraud Investigation Service, not a local compliance team. The word fraud sits in the department's name even where no fraud is alleged.
• What is in scope. HMRC says it will identify the particular issues it intends to focus on, but reserves the right to enquire into other issues found along the way. The named issues are a starting point, not a boundary.
• Whose affairs. The Code covers individuals, partnerships, LLPs, companies and trusts, and every tax HMRC administers. A case opened on one person routinely reaches connected entities and family arrangements.
• What is expected. Openness, complete and accurate information, continued on-time filing of current returns, and attendance at meetings. Each of these is later re-read as evidence of behaviour when penalties are calculated.

The Code also confirms what HMRC does before it writes. It may examine your returns, accounts and statements, and approach third parties for information about you, before contacting you or your adviser at all. By the time a COP8 letter arrives, HMRC has usually already decided that something in the picture does not reconcile. You can read the current version at HMRC's published Code of Practice 8.

COP8 and COP9: what HMRC is alleging and what it is offering

The two codes are not points on a severity scale. They are different instruments with different mechanics. COP9 is an allegation plus an offer. COP8 is neither an allegation of fraud nor an offer. We cover the contractual route in detail in our guide to Code of Practice 9 and the Contractual Disclosure Facility against the IRS non-wilful certification; the table below isolates only what changes when the letter says 8 instead of 9.

Feature	Code of Practice 8	Code of Practice 9
What HMRC alleges	Suspected significant loss of tax; no allegation of fraud at the outset	Suspected deliberate conduct bringing about a loss of tax
What HMRC offers	Nothing contractual	The Contractual Disclosure Facility: a formal offer carrying a 60-day acceptance window, after which non-response is treated as rejection
Admission required	None; you may contest the technical position throughout	An outline disclosure of deliberate conduct is required to accept
Protection from criminal investigation	None. HMRC may change approach if fraud is suspected or found	Contractual protection for the conduct fully and accurately disclosed
Typical driver	Avoidance structures, complex arrangements, unexplained offshore data	Evidence pointing to deliberate understatement or concealment
Disclosure format	Responses to enquiries; often a Certificate of Full Disclosure at settlement	Outline disclosure, then a formal disclosure report
Who conducts it	Fraud Investigation Service specialist investigators	Fraud Investigation Service specialist investigators

The asymmetry matters. A taxpayer under COP9 who tells the truth completely buys something specific. A taxpayer under COP8 who tells the truth completely buys penalty mitigation and credibility, but no contractual shelter. That is why COP8 is often the harder letter to answer well: the incentives are less obvious, and the temptation to argue rather than reconstruct is stronger.

Why can an offshore-connected case be opened under COP8?

Many advisers assume offshore means COP9. HMRC's own internal guidance says otherwise. The Technical Teams Operational Guidance states that COP8 applies to all investigations worked by Fraud Investigation Service technical teams where the Contractual Disclosure Facility is not appropriate, that COP8 is primarily used to investigate avoidance, and that there will occasionally be circumstances where the service wishes to investigate a case involving evasion but the criteria for using COP9 under the CDF procedure do not apply. It also states there should be no occasion when the CDF procedure is applied within a COP8 case. That guidance is published at TTOG3415 on gov.uk.

In practice, four fact patterns produce a COP8 letter to a US-connected UK resident:

• Automatic exchange data that will not reconcile. Financial account information reaches HMRC under the Common Reporting Standard, and separately under the intergovernmental arrangements built on FATCA. A US person living in London can appear in HMRC's data through non-UK accounts, through US-source reporting, and through the reporting of accounts held by structures they control. An anomaly of this kind shows an amount, not an intention, so it supports a COP8 opening but not a fraud allegation.
• A structure that is technically arguable. Offshore trusts, non-UK holding entities, deferred remuneration and cross-border partnership interests can be entirely legitimate and still produce a materially different UK answer from the one filed. HMRC opens under COP8 precisely because the point is technical.
• A residence or domicile position under pressure. Split-year treatment, days counted under the statutory residence test, and the treatment of foreign income and gains from 6 April 2025 onwards are all fact-heavy. Where HMRC believes the filed position depends on facts it cannot verify, COP8 is the tool used to test them.
• Unresponded nudge correspondence. Where earlier prompts about overseas income were answered thinly or not at all, the file can be escalated to specialist investigators without HMRC ever having gathered enough for a CDF offer.

None of these requires HMRC to believe you acted dishonestly. All of them entitle HMRC to look at everything.

Does COP8 protect you from prosecution?

No, and the Code says so twice, in two different ways.

The forward-looking risk

HMRC reserves the right to change approach if it suspects or finds evidence of fraud at any point. The Code contemplates the case being dealt with under COP9 instead, or being conducted with a view to criminal prosecution under the criminal evidence framework. Nothing about the COP8 opening constrains that.

The self-inflicted risk

Separately, the Code warns that if you make a statement you know to be false, HMRC may conduct a criminal investigation leading to prosecution. It repeats the warning specifically about the Certificate of Full Disclosure that HMRC often asks a taxpayer to sign at settlement where errors or omissions have been found. In other words, the most common route from COP8 to a criminal file is not the conduct HMRC started investigating. It is the response.

This is the point at which dual US-UK cases go wrong. A taxpayer who has never filed US returns, or who has filed but omitted foreign accounts, has an obvious incentive to keep the UK explanation narrow. Narrow explanations are exactly what unravel when the underlying banking records arrive.

When can HMRC move a COP8 case to the Contractual Disclosure Facility?

Because the CDF is not applied inside a COP8 case, a change of footing means a new letter. HMRC closes the COP8 approach and issues a COP9 offer under the Contractual Disclosure Facility, whose mechanics are set out in HMRC's published CDF guidance. From the taxpayer's side, the practical triggers are consistent:

• Documents obtained from third parties that contradict an explanation already given.
• An account of events that changes materially once HMRC produces evidence.
• Evidence of steps taken to conceal, such as backdated documentation, restructuring after an enquiry began, or instructions to a bank inconsistent with the declared position.
• Discovery that current-year returns are still being filed on the same incorrect basis while the enquiry runs.

The reverse also happens and is worth stating, because it is the reason COP8 is worth answering properly. A COP8 case in which the taxpayer reconstructs the position early, discloses more than was asked, and demonstrates that the error was technical rather than deliberate can settle as a careless or even innocent-error case, with penalties mitigated accordingly and no publication or monitoring consequences. The footing is not fixed by the opening letter. It is fixed by the evidence you put in front of the investigator.

What does the response pack look like when US returns are also unfiled?

This is where a general UK investigations response fails a dual filer. HMRC's enquiry and the US filing gap are not two problems in sequence. They are one factual record being read by two authorities with different definitions, different time limits and different penalty regimes. The work has to be built once, and built to survive both.

Step one: reconstruct before you answer

Rebuild the underlying record for every year in scope before responding on substance: account statements, entity accounts, distributions, trust deeds, remuneration documents, residence day counts, and the movement of funds between jurisdictions. Ask HMRC for a reasonable extension if the timetable does not allow this; the Code expressly says HMRC will allow more time where the request is reasonable and explained. An extension requested with reasons costs nothing. A fast wrong answer costs the case.

Step two: compute both positions in parallel

Every year should be modelled twice: the corrected UK position, and the US position for the same year on US principles. The two rarely agree. UK tax and US tax attach to different amounts, at different times, on different characterisations, and the interaction runs through foreign tax credit relief and the treaty rather than through simple offset. Our cross-border tax analysis for investigation cases exists precisely to keep the two ledgers reconciled while the enquiry is live.

Step three: choose the US route deliberately

Where US returns are unfiled or materially incomplete, the available routes have different eligibility tests and different consequences. The Streamlined Foreign Offshore Procedures require a certification of non-wilful conduct signed under penalties of perjury, and the IRS sets out the terms at its streamlined filing compliance procedures page. Unreported foreign accounts also carry their own reporting obligation on the FBAR, explained by the IRS at its Report of Foreign Bank and Financial Accounts guidance. Whether a streamlined submission is available at all depends on facts HMRC is simultaneously investigating, which is why the choice cannot be made in isolation. We set the analysis out in full for IRS streamlined filing cases.

Step four: sequence the filings

Sequencing is a technical decision, not an administrative one. Corrected UK figures can change the foreign tax credit available on a US return, and US amendments can change the credit relief claimed in the UK. Filing one side before the other is settled routinely produces returns that have to be amended again, and every amendment is a document HMRC will read. The sequencing also has to respect each country's limitation periods for claiming relief, which are not the same and do not run from the same date.

Step five: write one account of the facts

The narrative given to HMRC and the narrative supporting any US submission must be the same narrative. Not similar. The same. Two authorities now exchange information routinely, and an inconsistency between a UK explanation and a US certification is the kind of discrepancy that converts a civil enquiry on both sides into something else entirely.

The Certificate of Full Disclosure and the US certification: the same trap, twice

At the end of a COP8 case where errors or omissions were found, HMRC commonly asks for a signed Certificate of Full Disclosure confirming that all taxable income, gains and duties have now been declared. The Code warns that signing a certificate you know to be false may lead to criminal investigation and prosecution.

A US person in a streamlined submission signs a comparable instrument: a certification of non-wilful conduct, under penalties of perjury, describing why the returns and reports were not filed. Two signatures, two jurisdictions, one set of facts. The failure mode is a taxpayer who signs the HMRC certificate on a narrow reading of what was in scope, then signs a US certification describing the history differently, or vice versa. Neither document is a formality. Both are evidence.

How the two systems differ on the numbers that decide the case

Issue	UK / HMRC	US / IRS
Who investigates	Fraud Investigation Service under COP8 or COP9	Civil examination function, with referral to criminal investigation where indicated
Disclosure contract available	Only under COP9 via the Contractual Disclosure Facility	Voluntary disclosure practice; streamlined procedures for non-wilful cases
Behaviour test that drives penalties	Innocent error, careless, deliberate, deliberate and concealed	Reasonable cause, negligence, wilfulness
Offshore uplift	Higher penalty rates apply to offshore matters, above the equivalent onshore rates	Separate FBAR penalty regime, with materially higher exposure where conduct is wilful
How far back	The ordinary assessment window is four years from the end of the tax period, extending to six years for careless conduct, twelve years where an offshore matter is involved and twenty years for deliberate conduct	Assessment period extends where income is substantially omitted, and does not start at all for unfiled returns
Behaviour after settlement	Possible monitoring under the serious defaulters programme and publication where conduct was deliberate	Compliance history feeds future examination selection
Privilege over adviser communications	Legal professional privilege does not extend to accountants	A limited federally authorised practitioner privilege exists, and does not apply in criminal matters

The privilege line in that table is the one most often overlooked. In a UK investigation, correspondence with an accountant is not privileged, and HMRC can seek it. Structuring how advice is taken at the outset of a COP8 case is part of the response, not a detail to sort out later. For high-net-worth clients with layered structures, that decision is best made in week one.

Penalties, payments on account, and the cost of drift

COP8 settles with tax, statutory interest and penalties. The Code lists the failures that attract penalties, including failing to notify a liability, failing to file, giving an inaccurate return carelessly or deliberately, and failing to correct a known mistake within a reasonable time. It then states plainly what reduces them: how and when you tell HMRC about the problem, and how and when you co-operate to put it right.

Three practical consequences follow for a dual filer:

• Interest runs regardless of who is right. HMRC will ask for a payment on account of the expected liability. Making one does not concede the technical argument, and it stops late payment interest accruing on the amount paid. In long-running cross-border cases the interest cost of a two-year enquiry can exceed the penalty.
• Current returns must stay clean. The Code treats ongoing compliance behaviour as an indicator of willingness to engage. Filing the current UK return, and the current US return, on the same basis HMRC is challenging is a self-inflicted wound.
• Disclosure that arrives early is worth more than disclosure that arrives complete. Penalty mitigation rewards timing as well as content. A dual filer who tells HMRC in month one that US filings are also being corrected is in a materially different position from one who mentions it at settlement.

What to do in the first thirty days

• Do not reply on substance to the opening letter beyond acknowledging it and confirming who will act.
• Identify every year, entity, trust and account that could fall within the named issues and within the issues HMRC is likely to reach.
• Establish immediately whether US filings for the same years are complete, incomplete or absent, and whether any prior US submission described the facts in a way that is now inconsistent.
• Preserve records. The Code asks you to keep all existing records, including electronic records, whether or not the law requires it.
• Ask for a realistic timetable, with reasons, before the first meeting is fixed.
• Decide the US route and the UK settlement strategy together, not in sequence.

A COP8 letter is not a verdict, and it is not a milder version of COP9. It is HMRC's specialist investigators telling you they intend to establish the facts and have not yet decided what those facts are. For a US-connected UK resident, the facts exist in two systems at once, and the response has to be built accordingly.

Speak to us before you respond

Jungle Tax prepares US and UK returns for individuals, founders and families whose affairs sit on both sides of the Atlantic, including those already under HMRC enquiry. If a Code of Practice 8 letter has arrived and your US filings are incomplete, the order in which you answer matters more than the speed. Contact our cross-border team for a confidential, privileged-by-design review of your position before anything is sent to HMRC or the IRS. You can also explore our wider US-UK tax services and our published technical guides.