I usually use a 10mm countersinking bit in my hand drill, and work on it from both sides so it doesn't rip the wood or the finish.
If you're using paper, about 180 grit should do it. You only need to widen the hole about 1mm on each side (from 8mm to 10mm diameter), so don't go crazy with it. Use the washer from the new pot to mark the outline of the new hole, and wrap the paper round something like a pencil or drill bit so the hole stays rounded.