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UK’s HM Treasury Seeks to Lower Bar for Criminal Prosecution for Tax Filing Issues

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Enforcement Policy-Making Private Wealth Tax United Kingdom

Financial Times highlighted[1] over the weekend that the UK’s tax authority HMRC intends to criminalise tax mistakes[2], focussing specifically on “reckless untrue statements or declarations” in relation to direct tax, by way of a policy consultation[3] authorised by the Autumn Budget 2025[4].

Direct taxes[5] in the United Kingdom principally span income tax, capital gains tax, inheritance tax and national insurance contributions (for individuals) and corporation tax (for legal entities).

A criminal recklessness threshold already exist for indirect tax and therefore the proposal here is to lower[6] the current threshold of “deliberate”, “knowing” and “dishonest” for criminal prosecution for direct tax.

Under this new proposed regime, consequences may include up to two years in jail or unlimited fines. Criminal liability was historically reserved for actual tax evasion.

Tax advisers and industry practitioners[7] have pushed back[8], with some arguing that existing enforcement powers are sufficient, whereas others pointing out that there is a matter of interpretation as to where “carelessness ends and recklessness begins”[9].

Notes

  1. Emma Agyemang, ‘Q&A: HMRC considers criminalising ‘reckless’ tax mistakes: Taxpayers and advisers face threat of jail sentences of up to two years’ (Financial Times, 5 September 2026). https://www.ft.com/content/676ae308-3609-4fb8-881f-0e5e3a1af0ca. ↑
  2. Alex Marsh, ‘Taxpayers could face prosecution for mistakes under new HMRC rules: Tax office’s plans to penalise ‘reckless’ claims risk criminalising honest errors, warn experts’ (The Daily Telegraph, 21 August 2026). https://www.telegraph.co.uk/money/tax/news/taxpayers-face-prosecution-for-self-assessment-mistakes/. ↑
  3. ‘Introducing a criminal offence for making reckless untrue statements or declarations in direct tax’ (HM Revenue & Customs, 23 June 2026). 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 · Archive 1 · Archive 2. ↑
  4. ‘Response to behavioural penalties consultation, new recklessness offence and corporation tax late filing penalties increase’ (Practical Law Tax, 27 November 2025). https://uk.practicallaw.thomsonreuters.com/w-048-6954?contextData=(sc.Default)&transitionType=Default. ↑
  5. ‘ARTG1060 - Introduction: Guidance - direct taxes’ (HM Revenue & Customs, 17 July 2026). https://www.gov.uk/hmrc-internal-manuals/appeals-reviews-and-tribunals-guidance/artg1060 · Archive 1 · Archive 2. ↑
  6. Adam Craggs, ‘HMRC recklessness conduct offence extends scope of powers’ (Business & Accountancy Daily, 22 July 2026). https://www.accountancydaily.co/hmrc-recklessness-conduct-offence-extends-scope-powers · Archive 1 · Archive 2. ↑
  7. Somesh Jha, ‘UK Proposal to Criminalize Reckless Tax Filings Gets Pushback’ (Bloomberg Tax, 18 August 2026). https://news.bloombergtax.com/daily-tax-report-international/accountants-object-uk-move-to-criminalize-reckless-tax-filings · Archive 1 · Archive 2. ↑
  8. ‘ICAEW rejects case for new recklessness offence’ (ICAEW, 18 August 2026). https://www.icaew.com/insights/tax-news/2026/aug-2026/icaew-rejects-case-for-new-recklessness-offence · Archive 1 · Archive 2. ↑
  9. Kate Ison & Jackelyn West, ‘A new criminal offence for reckless untrue statements in direct tax’ (Macfarlanes, 9 July 2026). https://www.macfarlanes.com/insights/102nb94/a-new-criminal-offence-for-reckless-untrue-statements-in-direct-tax/ · Archive 1 · Archive 2. ↑