Penalties and time limits
COP8 penalties, interest and time limits
The outcome of a COP8 investigation depends heavily on how HMRC classifies your behaviour. That classification drives both the size of any penalty and how many years HMRC can go back.
Penalty ranges
| Behaviour | Maximum | Minimum if unprompted | Minimum if prompted |
|---|---|---|---|
| Careless | 30% | 0% | 15% |
| Deliberate | 70% | 20% | 35% |
| Deliberate and concealed | 100% | 30% | 50% |
| Offshore matters | Up to 200% | Depends on territory category | Depends on territory category |
Penalties are a percentage of the ‘potential lost revenue’, broadly the extra tax due as a result of the error. They can be reduced for the quality of your disclosure: telling HMRC, helping it and giving it access to records. "Prompted" means you disclose after HMRC has started looking, rather than coming forward on your own.
Careless penalties can sometimes be suspended. If you meet conditions HMRC sets over a period of up to two years, the penalty is cancelled.
Additional offshore penalties
Where offshore assets or income are involved, further penalties can apply on top of the standard ones. These include an extra penalty where assets are moved to avoid international information exchange, an asset-based penalty linked to the value of the asset in the most serious cases, and the Failure to Correct penalty for offshore non-compliance that was not corrected by 30 September 2018, which starts at 200% of the tax and can be reduced to no less than 100%.
How far back can HMRC go?
Normal limit
Careless errors
Most offshore income and gains
Deliberate behaviour
This is why arguing the right behaviour category matters so much.
Interest
HMRC charges late-payment interest on tax paid late. A payment on account — money paid towards the likely bill before it is agreed — can stop more interest building up.
How we reduce your exposure
- Arguing the right behaviour category
- Challenging years that are out of time
- Maximising reductions for disclosure
- Checking HMRC's calculations
- Negotiating the settlement
Confidential consultation
Speak to a COP8 specialist before you reply to HMRC
What you say and sign in the first weeks shapes how a Code of Practice 8 investigation unfolds. Tell us what you have received and we will talk you through your options, in confidence and without obligation.
Not ready to talk? Take the 2-minute COP8 risk check
- ICAEW Chartered Accountants
- Strictly confidential
- Specialist in HMRC investigations
- We'll call you within 2 hoursOutside office hours? We'll call you by 11am the next working day.