Reckless tax statements could soon be a crime: what your business needs to know

HMRC wants to make it a criminal offence to recklessly file untrue statements for direct tax and is proposing a new criminal offence for reckless errors in direct tax filings. While still under consultation, the direction is clear, boards, finance teams, and advisers should take note.

On 23 June 2026, HMRC launched a public consultation on creating a new criminal offence targeting reckless untrue statements or declarations in the direct tax space. It runs until 16 August 2026 and forms part of a wider package of measures announced at the Autumn Budget 2025, aimed at reducing the UK’s tax gap, which stood at roughly £46.8bn in 2023–2024.

The gap in the law – and how HMRC plans to close it

For indirect taxes, recklessly making an untrue statement is already a criminal offence (see section 72(3) of the Value Added Tax Act 1994 and section 167(1) of the Customs and Excise Management Act 1979). There is no equivalent for direct tax.

To secure a conviction in a direct tax case today, the prosecution must prove dishonesty. If they cannot meet that threshold, the defendant walks free, even where their conduct was clearly culpable.

The consultation proposes closing that gap with a new offence that sits between mere carelessness and outright dishonesty.

In practical terms, if you make a statement or declaration to HMRC about your direct tax affairs that turns out to be incorrect and you were aware of the risk but proceeded anyway, that could be enough. A ‘statement’ is defined broadly and includes anything said orally, in writing or implied by conduct. A ‘declaration’ is narrower: a formal assertion of fact made in a prescribed form and affirmed as true.

Importantly, this would not apply only to taxpayers. Agents such as tax advisers, accountants or anyone filing on a client’s behalf would also be within scope.

On sentencing, HMRC proposes up to two years’ custody and/or an unlimited fine on indictment, mirroring the existing penalty under section 167(1) of the Customs and Excise Management Act 1979.

Where the line is drawn

HMRC is clear that this is not about criminalising genuine mistakes. Innocent errors and carelessness would continue to be dealt with through civil penalties.

At the other end of the spectrum, deliberate and dishonest behaviour would still be prosecuted under existing fraud and evasion offences, which carry significantly heavier sentences.

To illustrate the boundary, the consultation includes worked examples. One that stand out is, a taxpayer claiming a substantial relief without reviewing guidance or taking advice, on the assumption that ‘it’s probably fine’ – this would likely fall on the wrong side of the recklessness threshold. Further guidance on the distinction is expected.

Key takeaways

• A new offence for direct tax is coming – HMRC proposes criminalising reckless untrue statements and declarations, bringing direct tax into line with indirect tax for the first time
• The bar drops from dishonesty to recklessness – Prosecutors would no longer need to prove dishonesty, awareness of risk and proceeding regardless would suffice
• Advisers are in scope – Tax agents filing recklessly on a client’s behalf would face the same exposure
• Meaningful penalties – Up to two years’ custody and/or an unlimited fine
• Genuine mistakes remain civil matters – Careless or innocent errors would continue to be addressed through civil penalties
• Review your processes now – This is a good opportunity to assess your tax compliance procedures, governance sign-offs and record-keeping and consider whether you are taking sufficient professional advice
• Respond to the consultation – Have your say, submission responses are due by 16 August 2026, and engagement is encouraged.