HMRC closes consultation on proposed reckless-tax offence; evidence trails are the real issue
HM Revenue & Customs has closed its consultation on a proposed criminal offence for reckless untrue statements in direct-tax matters. The consultation ran from June 23 to August 16, and the published record now stops at policy design: no final response or legislation had been issued by September 5. The immediate consequence for taxpayers, advisers and software buyers is a need to preserve the decision trail behind a material filing, not a new criminal liability already in force. (GOV.UK consultation)
The mental test is narrower than a tax error
Under HMRC’s proposal, a statement or declaration about direct tax could be criminal if its maker was aware of a risk that it was untrue and proceeded when taking that risk was unreasonable in the circumstances known to the maker. The proposal covers written, oral and implicit statements, and would include agents when they make the relevant statement to HMRC. The suggested maximum on indictment is two years’ imprisonment, an unlimited fine, or both. (Operative consultation chapter)
That is a knowledge-and-conduct test, not a strict-liability rule. HMRC’s examples separate innocent error and carelessness from recklessness. The Association of Taxation Technicians says the proposal has not shown why existing powers are insufficient and warns that the line between carelessness and criminal recklessness could remain unclear. The Chartered Institute of Taxation expects more compliance cost and more heavily caveated advice. (ATT response, CIOT response)
A filing system would need to reconstruct the decision
The proposal maps to seven practical control questions: what statement was made; which direct-tax matter it concerned; which source data and calculations supported it; who made and reviewed it; what warning or contradictory information was visible; why the known risk was accepted; and how any later correction was recorded. A system that merely stores the final return answers accuracy. A system that preserves source-to-field lineage, reviewer comments, escalation, override reasons and immutable timestamps helps establish what the maker knew before filing.
That creates a plausible control requirement for tax departments, advisers and workflow vendors, but no mandated product category or revenue pool. The relevant buyer test is evidence coverage across the filing chain, not a claim that every tax error has become criminal.
The next legal node is a government response, draft text or bill. The Finance Bill 2026–27 collection provides the official legislative route, while the consultation itself supplies the current mental-element test. If ministers retain that test, provenance and risk-disposition records become procurement priorities; if they drop it, the incremental case for spending on this proposal disappears.