Proposed offence for reckless, untrue statements for direct taxes

For Customs and Excise and VAT ('indirect taxes'), it is possible to prosecute individuals who make untrue statements or submit incorrect documents either knowingly or recklessly, without the need to prove dishonesty. The penalties for such offences can be severe, including substantial fines and imprisonment. The direct tax regime does not currently contain an equivalent offence.

As part of the government's commitment to closing the tax gap, the consultation proposals aim to address this inconsistency by mirroring, within the direct tax regime, the indirect tax criminal offence of recklessly making untrue statements.

• The proposed offence would be committed when a ‘statement’ or ‘declaration’ is made that is ‘untrue’, and the maker of the statement has acted ‘recklessly’.
  • 'Statement' would mean any statement, including oral statements, written statements made in documents, and statements made implicitly by a person’s actions.
  • 'Declaration' would mean a formal assertion of fact made in a prescribed manner in which a person declares or solemnly affirms that the information is true or that they believe it to be true.
  • 'Untrue' would mean not correct or accurate without consideration of intention. There would be no offence where a mistake was innocent, as while this would be untrue, it would not be reckless.
  • 'Reckless' would mean that the maker of the statement was aware of the risk that the statement was false or untrue, and they unreasonably proceeded to make the statement anyway.
• It is proposed that the offence would carry a custodial sentence and/or a fine on indictment, to be decided by the courts. Consideration is being given to following the Customs and Excise rules, which include a maximum sentence of two years and unlimited fines. This differs from the provisions at s72(3) VATA, which provide for a potential custodial sentence of up to 14 years.

In the consultation document, HMRC have set out examples of what they consider to be reckless errors which would be caught by the proposed new rules:

• Making a significant relief claim without reading the relevant guidance properly or seeking advice or clarification on the basis that it will 'probably be fine'.
• A self-employed taxpayer who prepares their own tax return knows they have multiple bank accounts and suspects they have received taxable income therein. They do not check the statements and estimate income for the main account only, omitting income from secondary accounts. They unintentionally file a materially inaccurate tax return.

The document does make the point that carelessness would not be caught here and Deliberate behaviour would be covered by existing penalty legislation.

Responses can be emailed to This email address is being protected from spambots. You need JavaScript enabled to view it. The closing date for submissions is 16 August 2026. 

Useful guides on this topic

Penalties: Deliberate Behaviour
What penalties apply when a taxpayer has acted deliberately, resulting in a potential loss of tax revenue? What is classed as deliberate behaviour? What is the relevant case law for deliberate behaviour?

Client guide: Reasonable care and tax penalties 
What triggers a tax penalty? What standard of care is expected from a taxpayer? What is reasonable care? When is an error careless?

External link

Consultation: Introducing a criminal offence for making reckless, untrue statements or declarations in direct tax 

Question 1: Do you agree that a criminal offence for making reckless, untrue statements or declarations should be introduced for all direct tax matters? And if not applied to all direct tax matters, why not? Please give reasons for your response.

Question 2: What impacts do you foresee for taxpayers, advisers, and other stakeholders if an offence for making reckless, untrue statements or declarations is introduced for direct tax?

Question 3: Are there particular types of behaviour or circumstances that you believe should or should not fall within the scope of the new offence? Please give reasons for your response.

Question 4: We are interested to hear whether consultees find ‘statement’ or ‘declaration’ easier to understand. Please explain your answer and provide any alternatives.

Question 5: How might the introduction of a reckless, untrue statements or declarations offence affect compliance behaviour among individuals and businesses?

Question 6: What challenges or risks do you foresee in implementing this change, and how might they be mitigated?

Question 7: Do you have any other comments or suggestions regarding the proposed change?

Question 8: Do you believe this option best achieves proportionality and deterrence for a direct tax recklessness offence, and why?

Question 9: Do you agree that fines should be unlimited on indictment? If not, what alternative would you propose and why?