HMRC opened 1,091 serious tax investigations in 2023

HMRC has opened 1,091 serious tax investigations in the last year to March 31 2023, according to multinational law firm Pinsent Masons. 

Known as ‘COP8’ and COP9’ investigations, these probes reportedly provide an opportunity for taxpayers to avoid the heaviest penalties, including prison sentences, if they cooperate fully with HMRC. 

According to the firm, some 417 investigations were carried out during the year to March 2023 into the most serious suspected cases of tax evasion under COP9. 

Additionally, 674 COP8 civil investigations into those believed to be avoiding tax were also carried out. In total, HMRC has 3,300 of these COP8 and COP9 investigations under way.

The scale of these most serious investigations forms part of a crackdown on major tax evasion and avoidance by HMRC.

The UK’s tax gap, which is the difference between the total amount of tax expected to be paid and the total amount of tax actually paid, is specifically caused by tax evasion and stood at £4.7bn for 2021/22, up by £1bn from 2020/21. Tax avoidance schemes also added another £1.4bn in 2021/22.

In both COP8 and COP9 investigations, the scale of penalties levied by HMRC are reportedly behaviour-based, depending on whether the taxpayer “took reasonable care, was careless or deliberate”.

Sophie Warren, tax manager at Pinsent Masons, said: “The number of serious tax investigations opened by HMRC demonstrates the extent of HMRC’s crackdown on the most serious tax evasion and avoidance.

“A COP8 or COP9 investigation represents the ‘last chance saloon’ for people who have been involved in fraudulent evasion of tax or have partaken in tax avoidance schemes. It’s the final opportunity to come clean to HMRC. If they don’t, the scale of the penalties can be eye-watering – hundreds of millions in fines or even years in prison.”