A new informant reward scheme for high-value tax fraud was introduced in the 2025 Budget. This could lead to more COP8 and COP9 investigations. Our tax defence team can help
The Budget 2025 introduces a strengthened informant reward scheme for high-value tax fraud. HMRC will now be able to pay larger rewards to individuals who provide information leading to successful tax recoveries. This is expected to generate more intelligence reports, particularly in cases involving complex fraud, offshore arrangements, under-declared income and disguised remuneration schemes.
For anyone worried about Code of Practice 8 (COP8) or Code of Practice 9 (COP9), this change matters. More intelligence means HMRC will open more enquiries, often on the basis of a single report. But receiving a COP8 or COP9 letter does not mean you have committed fraud. These cases can be managed, responded to and defended effectively with early advice.
This blog explains what the changes mean, why you may be more likely to hear from HMRC, and how to protect yourself if you are concerned about an investigation.
What has the Government changed in Budget 2025 and why will it affect HMRC investigations?
The Budget 2025 provides HMRC with increased funding to pursue high-value and complex tax fraud. A key part of this strategy is the enhancement of the informant reward scheme.
- In simple terms, HMRC can now offer larger, more flexible payments to people who report suspected tax fraud.
- These reports can come from almost anyone: former partners, employees, competitors, accountants or individuals who come across relevant information.
By increasing rewards, the Government expects to prompt more disclosures. The Fraud Investigation Service already relies heavily on intelligence to identify serious non-compliance. With more incentives now available, HMRC will have a larger pool of information to assess and investigate.
In practical terms, this means more individuals will receive letters relating to suspected irregularities. Some will be approached through normal compliance channels. Others will receive COP8 or COP9 notices, particularly where HMRC believes there may be deliberate behaviour or dishonesty.
FWJ Takeaway: More intelligence will lead to more enquiries. You may be contacted even if you have done nothing wrong.
What are COP8 and COP9 and why might more people now receive these letters?
HMRC uses two formal procedures where it suspects tax arrangements may not be correct.
- COP8 is used where HMRC believes there is a significant loss of tax but does not yet allege deliberate fraud. These cases often involve complex technical issues, offshore structures, avoidance schemes or specialist tax planning advice. COP8 cases can still carry serious financial consequences.
- COP9 is reserved for cases where HMRC suspects deliberate tax fraud. It is issued with the Contractual Disclosure Facility (CDF), which offers the individual a final opportunity to admit any deliberate behaviour in return for protection from criminal prosecution. It is one of the most serious letters HMRC can send.
The new reward scheme increases the likelihood of both being issued. HMRC may now pursue lines of enquiry that, in previous years, would not have been investigated due to limited information or resource constraints. A single report from an informant can trigger a review of tax returns, bank accounts and business records.
This does not mean HMRC has already formed a conclusion about your conduct. Many COP8 and COP9 cases arise from misunderstandings, incomplete data or complex transactions that require explanation.
FWJ Takeaway: Receiving a COP8 or COP9 letter is not an accusation of guilt but it must be taken seriously.
How will the enhanced reward scheme lead to a rise in COP9 (fraud) enquiries?
COP9 is triggered when HMRC suspects deliberate behaviour. The strengthened reward scheme makes it more likely that HMRC will receive tips or intelligence pointing towards such conduct. These tips can come from:
- Business competitors
- Former employees
- Ex-partners or spouses
- Professional advisers with reporting obligations
- Individuals aware of offshore assets or historic tax arrangements
- People motivated by the opportunity for a financial reward
With increased incentives, HMRC will expect the volume and quality of intelligence to rise. This does not mean more people have committed fraud. It simply means HMRC will have more leads to explore.
Many individuals receive a COP9 letter because HMRC has incomplete information or has misunderstood the nature of a transaction. The process provides an opportunity to explain the position and challenge HMRC’s assumptions. Early advice is essential, as the terms of the CDF require a decision within a short timeframe.
FWJ Takeaway: HMRC’s threshold for opening a COP9 case may now be lower, but the right response can prevent escalation. We have a team of tax defence experts lead by an ex HMRC investigator, Andy Lynch, who are here to help
What are the risks if you do not comply with COP8 or COP9 – and why do these letters demand immediate attention?
COP8 and COP9 enquiries carry serious consequences if ignored or mishandled.
If you do not comply with COP8
Failure to provide information can result in:
- Formal information notices
- Daily penalties
- Inferences being drawn against you
- Escalation to COP9
- Significant tax assessments and penalties
HMRC may assume that non-compliance is deliberate, even where the underlying issue was technical.
If you do not comply with COP9
COP9 comes with the Contractual Disclosure Facility. If you do not respond:
- HMRC may treat your silence as refusal to cooperate
- Criminal investigation becomes more likely
- You may face an interview under caution
- HMRC may seek account freezing orders over bank accounts or assets
- The matter could be referred for prosecution
- You may lose the opportunity to resolve the matter without criminal action
Ignoring COP9 is one of the most damaging steps an individual can take. HM Revenue & Customs expects a clear response and will escalate quickly if one is not received.
Why this should prompt early advice
COP8 and COP9 are designed to encourage cooperation. But this does not mean you should respond without support. A rushed, incomplete or inaccurate response can cause long-term problems. Many individuals unintentionally weaken their position by trying to explain things themselves.
FWJ Takeaway: Non-compliance can lead to escalation, penalties or criminal exposure. Immediate legal advice protects your position. Our tax disputes team can help you today.
What should you do if you are worried about COP8 or COP9 exposure?
If you receive a letter (or if you are worried that you may be at risk) taking early, calm steps can make a significant difference.
- First, do not ignore the correspondence. Deadlines are short, particularly for COP9, and silence removes important protections.
- Second, do not contact HMRC yourself. Individuals often say more than necessary or provide explanations that are misunderstood. Legal advice ensures your position is presented accurately. Andy Lynch worked at HMRC for 18 years so he knows how best to speak to them.
- Third, gather relevant documents. Bank statements, tax returns, emails and advice records can all help establish the facts.
- Fourth, understand the distinction between technical disputes and deliberate behaviour. Many COP8 and COP9 cases arise from complex arrangements, not dishonesty.
- Fifth, seek specialist advice as soon as possible. Early involvement allows us to review the position, assess risk, prepare evidence and engage with HMRC on your behalf. Most cases can be resolved without prosecution when managed properly. You can speak to our team today for a free initial consultation.
If your tax issues relate to a company, you may also need guidance on director duties, liquidator claims or any associated allegations of misconduct.
FWJ Takeaway: You are not powerless. With early guidance, COP8 and COP9 cases can be controlled, clarified and defended.
Conclusion
Budget 2025’s enhanced informant reward scheme will increase the volume of intelligence HMRC receives. As a result, more individuals are likely to be contacted about their tax affairs, and more COP8 and COP9 enquiries will be opened. But increased investigations do not mean every case will result in penalties or prosecution.
If you are worried about COP8, COP9 or any form of HMRC scrutiny, early advice is essential. A clear, accurate and legally-supported response protects your position and ensures the investigation is handled properly from the outset.
If you have received a COP8 or COP9 letter, or fear that you may be at risk, we can help you understand your options and guide you through the process.
