A Shift Beyond Dishonesty: Proposed Criminal Offence for Reckless Untrue Tax Statements and Declarations

On 23 June 2026, HM Revenue and Customs (“HMRC”) launched its consultation proposing the introduction of a criminal offence for making reckless untrue statements or declarations in relation to direct tax matters. The consultation has been launched following the announcements of a 5.3% tax gap (£46.8 billion) in 2023 to 2024 and a government intervention package aimed at closing the tax gap. 

The proposed offence

Reckless untrue statements made in relation to indirect taxes, like VAT, already constitute a criminal offence. However, there is no equivalent offence in place for direct taxes, like income tax and corporation tax, and criminal liability in relation to direct taxes is limited to cases involving dishonesty. Dishonesty can be difficult to prove to the criminal standard, so even where a taxpayer has submitted inaccurate information, they may not be held liable despite having acted with a significant degree of fault. 

The new criminal offence would apply where a person:

• makes a statement or declaration in relation to direct tax;

• which is untrue; and 

• where the maker of the statement or declaration was aware of a risk that the statement may not be true but nevertheless unreasonably proceeded to make the statement despite the risk. 

The proposed sanctions are unlimited fines and/or up to two years’ imprisonment, the appropriate sentence being a matter for judicial determination on a case-by-case basis. Additionally, HMRC has stressed that it is not intending to bring innocent mistakes, misunderstandings and errors arising from a failure to take reasonable care within the scope of the new offence. It will continue to address these issues through existing civil sanctions.

One key point to note is that tax agents filing recklessly on a client’s behalf would fall within the scope of the proposed offence.

The policy objectives are to ensure a consistent approach across all tax types, give prosecutors an alternative charge where dishonesty cannot be proved and to deter non-compliance. The consultation sets out a series of worked examples where it would apply and states that responses should be submitted by 16 August 2026.

We are providing input to the consultation via our contacts in professional bodies.

If you have any questions or would like to discuss any issues raised in this article, please contact Justin Briggs or Simon Lellouche. This article was written by Simon Lellouche and Charlotte Colvin.