New Criminal Offence for 'Reckless Untruth' in Direct Tax Declarations [HMRC Launches Consultation]

23 June 2026 – Consultation closes 16 August 2026

• HMRC has opened a public consultation on introducing a new criminal offence for making reckless, untrue statements or declarations in direct tax matters.
• The proposal would align direct tax with existing rules that already apply to indirect taxes (VAT and customs).
• The government says the aim is to ensure consistency across tax regimes and to ensure that those who engage in "highly culpable serious non-compliance" can be "fairly tried and properly brought to justice".

Why HMRC says existing fraud laws are not enough

• Many people assume that serious reckless statements in tax returns would already be caught by the Fraud Act 2006 or the common law offence of cheating the public revenue.
• However, HMRC states that these existing offences generally require proof of dishonesty.
• In some cases, prosecutors struggle to prove dishonesty to the criminal standard — even where the behaviour is seriously reckless and has caused significant loss to the Exchequer.
• The new offence is specifically designed to fill this gap by allowing prosecution for recklessness alone, without needing to prove dishonesty.

How "recklessness" is defined in the proposal

• The consultation defines recklessness in line with existing criminal law principles:
• A person acts recklessly if they:
• Are aware of a risk that the statement or declaration is untrue, and
• In the circumstances known to them, it is unreasonable to proceed with making the statement despite that risk.
• This sits between:
• Carelessness (civil penalties only), and
• Dishonesty/deliberate conduct (prosecuted under existing higher-tariff fraud or evasion offences).

Specific examples from the consultation document

The consultation includes a helpful table distinguishing the different levels of behaviour:

These examples show that the new offence is aimed at cases where the person knew there was a real risk the statement was wrong but chose to carry on anyway, without necessarily having a dishonest intent to defraud.

Key details of the proposed offence

• It would apply to statements and declarations in direct tax matters (income tax, corporation tax, capital gains tax, etc.).
• It would be an "either way" offence (can be tried in magistrates' court or Crown Court).
• Maximum penalty: 2 years' imprisonment and/or an unlimited fine (aligned with the equivalent indirect tax offence under the Customs and Excise Management Act 1979).
• It would not replace existing fraud prosecutions — those would continue to be used where dishonesty can be proven.

What should taxpayers and advisers do?

• While the offence is still at the consultation stage, the direction of travel is clear.
• Taxpayers and agents should ensure robust processes are in place for reviewing tax positions, documenting judgements, and seeking advice in higher-risk areas.

Consultation details

• Opened: 23 June 2026
• Closes: 11:59 pm on 16 August 2026

Responses should be sent to:

• asres.consult@hmrc.gov.uk

Official sources

This proposal forms part of the wider Tax Update 2026 package.

Primary sources:

• Main consultation page: https://www.gov.uk/government/consultations/proposed-offence-for-reckless-untrue-statements-direct-taxes
• Full consultation document (includes examples and detailed definition of recklessness): https://www.gov.uk/government/consultations/proposed-offence-for-reckless-untrue-statements-direct-taxes/introducing-a-criminal-offence-for-making-reckless-untrue-statements-or-declarations-in-direct-tax--3

Related:

• Summary of Tax Update 2026: https://www.gov.uk/government/publications/summary-of-tax-update-2026-simplification-modernisation-and-fairness