The government is consulting on the introduction of a new criminal offence for making reckless untrue statements or declarations in relation to direct tax matters, having first announced the policy at the Autumn Budget 2025. The consultation closes on 16 August 2026.

How will it work?

The government’s intention is for the new offence for direct taxes to mirror that currently in place for indirect taxes (s167(1), Customs and Excise Management Act 1979; s72(3), Value Added Tax Act 1994). 

The offence would be committed where a “statement” or “declaration” is made that is “untrue”, and the maker of the statement has acted “recklessly”. In applying the rules:  

• statement “includes oral statements, written statements made in documents, and statements made implicitly by a person’s actions”;
• by declaration, the government means “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 simply means “not correct”. The term is “concerned with whether a statement is accurate, not with what the person making it knew or intended”; and
• reckless is used “in the way that term is used across a range of existing criminal offences”, ie, to “mean that the maker of the statement was aware of the risk of their statement’s falsity or lack of truth, and they unreasonably proceeded to make the statement notwithstanding this risk of which they were aware”.  

The consultation document provides examples of reckless errors, including a taxpayer claiming a significant relief without carrying out the proper checks and a taxpayer omitting taxable income paid into a secondary bank account.  

Why is it needed?  

The government says that the new offence will provide consistency between indirect and direct offences and “create an enforcement tool which could be used in direct tax cases where dishonesty cannot be established but where a sanction is appropriate.”  

For example, where a jury is sure that a defendant recklessly made a false statement, the government considers that a jury should be able to return a verdict that reflects this culpable and harmful behaviour, where it decides that the defendant is not guilty of fraudulent evasion.

The government hopes that the new offence will have a deterrent effect, “leading to improved compliance behaviour”. It may encourage individuals and businesses to exercise greater caution and diligence when preparing tax returns.   

What sanctions will apply? 

The sanctions proposed by the government for the offence are:  

• a custodial sentence of up to two years; and/or
• an unlimited fine.  

While the maximum sentence the government proposes is a fine without limit or up to two years imprisonment, this is a maximum and it would be for judges to consider all the facts of any particular case and to impose an appropriate sentence. 

The government is interested in feedback as to whether the proposed sanctions are proportionate to the level of offence committed. 

Does it apply to agents? 

Yes, the consultation document confirms that the new offence will apply “to any agent who recklessly makes a statement or declaration to HMRC in relation to a direct tax matter”. 

How do I get involved?  

ICAEW will be responding to the consultation. If you have any feedback that could contribute to ICAEW’s response, please contact Richard Jones by 17 July 2026.