An HMRC plan to criminalise people making “reckless” untrue direct tax statements shouldn’t cause sleepless nights for most of the UK’s responsible limited company directors, says Integro Accounting.
Can HMRC send you to jail?
Despite HMRC saying that the offence will carry a two-year prison sentence and unlimited fine, “most responsible business owners have little to fear,” says Integro’s Christian Hickmott.
“Provided they keep proper records and take reasonable care, the bulk of contractor companies needn’t lose sleep over “Introducing a criminal offence for making reckless untrue statements…”
“That’s because in the consultation — open for responses until August 16th — HMRC makes clear that genuine mistakes and good-faith tax positions are not the target,” says Hickmott, Integro’s MD.
At a glance:
- HMRC is consulting on a new criminal offence for “reckless” untrue statements on direct taxes — up to two years in prison and an unlimited fine, with no need to prove dishonesty, though innocent mistakes aren’t the target.
- Integro Accounting’s Christian Hickmott says the HMRC plan “needn’t give responsible directors sleepless nights” — the real risk is a casual approach to compliance (unchecked assumptions, incomplete records), not honest error.
- Professional Passport’s Crawford Temple says he welcomes the direction of travel but questions whether HMRC will hold itself to the same standard.
- Online, critics like Dominic Arnold (ex-HMRC) and Juan Carlos Venegas (tax consultant) are questioning whether the offence is necessary, provable, or proportionate.
- Jesminara Rahman, a tax dispute specialist, says limited company directors who see off HMRC scrutiny do four things well, which we include below.
- A CTA-qualified technical tax officer warns the offence could deter disclosure — but Hickmott’s verdict stands: with responses due August 16th 2026, strong records and good advice remain contractor businesses’ best defence, if the offence becomes law.
Innocent mistakes won’t be criminalised, HMRC confirms
In line with the tax veteran’s assessment (Hickmott has 16 years as a contractor accountant), HMRC says the offence would “not criminalise innocent mistakes, misunderstandings, or accidental errors.”
According to Chapter 3 of the consultation, “Introducing a criminal offence for making reckless untrue statements or declarations in direct tax,” any extension of criminal liability would be balanced with “appropriate safeguards.”
Does HMRC need to prove dishonesty to prosecute under the new offence?
However, honesty would not, by itself, be a defence — the question HMRC will ask is whether a taxpayer took reasonable care, not whether they were not dishonest.
Alluding to why Integro Accounting advises it is “responsible” directors, not just “honest” ones, who don’t face sleepless nights, the accountancy firm quoted from the June 23rd HMRC consultation:
“These provisions mean that, for 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.”
In Chapter 4 of the 5,000-word consultation document, HMRC “finally” explains how it will define “recklessness,” an exasperated-sounding UK-Spain tax consultant, Juan Carlos Venegas, observed from LinkedIn.
How HMRC defines ‘recklessness’ in the consultation
HMRC defines ‘reckless’ as follows: “We use ‘reckless’ in the way that term is used across a range of existing criminal offences.
“We 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.”
Chapter 4 is also where the government explains why it is that taxpayers who were aware of the risk that their statements or declarations were untrue, but unreasonably proceeded anyway, such as “claiming a large relief without checks” (HMRC), now face being criminalised.
How does HMRC justify this new criminal offence?
HMRC reasoned: “Introducing a criminal offence for making reckless untrue statements or declarations in direct tax would create consistency across direct and indirect tax regimes.”
The consultation adds: “The proposed change would introduce a new offence for making reckless untrue statements or declarations in relation to direct taxes, mirroring the provisions already found in the CEMA and the VATA.”
Is HMRC’s justification for a new criminal offence being accepted?
Formerly of HMRC, Dominic Arnold says he doesn’t accept that aligning with the Customs and Excise Management Act (CEMA) and Value Added Tax Act (VATA) justifies introducing the new criminal offence.
“There have been very few, if any, recent prosecutions under the analogous CEMA and VATA rules,” posted Mr Arnold. “So the case of alignment is not made out for me.”
Speaking to Integro Accounting yesterday (July 28th), the boss of a leading PAYE compliance organisation seemed doubtful that joined-up thinking was reason enough to hold off introducing the reckless conduct offence.
“At a high level, these [HMRC] proposals appear logical — because they will bring greater consistency between the rules governing direct and indirect taxes,” explained Crawford Temple, the boss of Professional Passport.
Will HMRC’s reckless conduct offence help enforcement?
Mr Temple added in a statement to Integro Accounting: “Replacing the high threshold of proving fraud with reckless or untrue statements should make enforcement more practical [for HMRC]”.
An assessor of PAYE compliance since 2007, Mr Temple believes that a new criminal offence for making reckless untrue statements is HMRC sending a “clear message that simply failing to check the accuracy of information is no longer an acceptable excuse.”
And in 2026/27, with people following TikTok influencers’ tax tips, this may be the nub, signals Integro.
Integro Accounting: ‘casual’ compliance, not honesty, is HMRC’s real target
Fresh from showing the wording of the HMRC consultation to his 10-strong team of accountants (with FCCA, ACCA, AAT, FMAAT qualifications among them), Integro’s Mr Hickmott reflected:
“We calculate that the concern with the new recklessness offence proposal by HMRC is more likely to be felt by individuals who take a casual approach to tax compliance.
“We define a casual approach to tax compliance as making assumptions without checking the facts. A casual approach to tax compliance could also include relying on incomplete records.”
According to the HMRC consultation, to commit the new criminal offence, a statement “would need to be false or untrue” and the statement-maker “aware of this risk in circumstances where it was not reasonable to take this risk.”
HMRC’s example: claiming a large relief without checks
HMRC then offers an example — “Claiming a large relief without checks.”
With such a claim, HMRC said the new offence would likely apply where the taxpayer recognised a risk that their claim may be incorrect, but proceeded without taking reasonable steps to check.
Such a taxpayer would be showing “disregard for the accuracy of the return, which is reckless,” even if there was “no intention to deceive”.
HMRC says: “This would therefore be viewed as inside the scope of recklessness. As it was not deliberate and there was no intention to deceive, it would be behaviour falling within the proposed new offence.”
What ‘reasonable steps to check’ actually mean according to HMRC?
As to what “reasonable steps to check” might entail — steps that might nullify the offence — HMRC said it could be ‘reading relevant guidance properly,’ and ‘not seeking advice or clarification.’
Therefore, without reading .gov, and without, say, consulting an experienced accountant, the taxpayer just went ahead and submitted the relief claim “anyway…[thinking] “it’s probably fine,” exampled HMRC.
Integro’s Christian Hickmott: software ‘doesn’t guarantee accuracy’
And it’s not just claims that people pick up on TikTok that could be the impetus.
Integro’s Mr Hickmott cautions: “As Making Tax Digital, automation, and AI become more common, our accountancy firm is increasingly seeing businesses assume that software guarantees accuracy.
“It doesn’t. Technology is a fantastic tool, but it can only work with the information it’s given.
“Therefore, professional judgement, good record-keeping, and a clear understanding of the tax rules remain essential — and will remain essential if this new reckless offence from HMRC is introduced.”
Is HMRC’s ‘reckless’ offence part of criminal law yet?
Hickmott is correct to caveat. HMRC says in the seven-chapter document that, at this stage, it is only “consulting,” merely “exploring,” and that “stakeholder engagement is an important part of this process.”
According to a tax dispute expert with 11 years’ experience in resolving HMRC investigations, Hickmott is also right to emphasise the importance of professional judgement.
“Getting the right advice at the right time is essential,” says the dispute expert, Jesminara Rahman, founder of Tax Resolute UK.
“Nevertheless, the most expensive sentence I hear during an HMRC investigation [is], ‘I thought my accountant dealt with it.’”
Four habits that help businesses withstand HMRC scrutiny
A former tax official, Rahman says individuals who see off HMRC scrutiny tend to do four things well:
- Keep good records
- Ask questions if they don’t understand something
- Tell their adviser when circumstances change
- Read tax returns before signing them.
Out of these four, it is ‘treating a tax return like just another document to be approved’ (Rahman), that’s arguably the most relevant to the proposed HMRC offence, signals Dominic Arnold, partner at S&W Group.
Is it reckless if you know your tax return could be wrong?
“HMRC says that a failure to take advice or seek clarification could be reckless where a person is aware that there is a risk that their return could be wrong,” Mr Arnold advised his online ‘followers.’
“I have dealt with many tax enquiries where HMRC officers would describe such conduct as ‘careless.’ But it could, if the proposal goes ahead, result in a criminal conviction.”
Is HMRC’s new criminal offence necessary or proportionate?
Arnold, who worked in corporation tax for HMRC, continued: “I’m personally not convinced that this measure is necessary or proportionate.
“HMRC prosecutes a relatively small number of people who commit deliberate tax fraud — preferring in many cases to deal with them through the Code of Practice 9 civil procedure — so I am not convinced that prosecuting where there is no dishonesty is the way to go.”
Proving recklessness may be difficult — but is that the point?
To make the new reckless conduct offence ‘stick,’ HMRC would need to show that any defendant had made a statement which they knew to be untrue, or that they submitted incorrect documents knowingly or recklessly.
But according to a social media post by Mr Venegas, the UK-Spain tax consultant (who is FAIA, FCPA, and ICFS-qualified), “these are all difficult elements to prove.”
Professional Passport sounds less convinced that such difficulty proving what taxpayers knew is a reason not to go ahead with the new criminal offence, in an age where tax ruses are plentiful.
How long have false contractor compliance claims been made?
“Within the temporary labour market, we’ve endured years of false compliance claims and misleading assurances from promoters of tax avoidance schemes,” Mr Temple, Professional Passport’s CEO, told Integro Accounting.
“While new Joint and Several Liability rules [governing umbrella companies and their clients] have reshaped the market, new models are already emerging that seek to sidestep those obligations. And these proposals [of a new criminal offence from HMRC] could help tackle that behaviour.”
Is HMRC applying the same high standards to itself?
Mr Temple says his “concern” is that HMRC isn’t applying the same high standards it is proposing for taxpayers to its own department.
“We’ve previously seen guidance that offered reassurance at consultation stage only for the legislation to be interpreted very differently in practice. The Managed Service Company legislation…[is] a prime example.”
Does a new criminal offence for reckless untrue statements have unintended consequences?
Last night, a technical tax officer shared her own concern with Integro Accounting.
“HMRC’s proposed new criminal offence isn’t just about where HMRC will draw the line between recklessness versus carelessness, and whether innocent people will be prosecuted — although both of those are important.
“It’s also about the unintended impact on taxpayer behaviour.”
The risk of disengagement — even among compliant taxpayers
The technical tax officer, who holds a CTA qualification — and a law degree — continued in a statement to Integro:
“Remember, HMRC’s wider compliance objective is to encourage taxpayers to come forward, disclose errors, and bring their tax affairs up to date.
“Well, taxpayers who believe that doing any of that could actually result in criminal prosecution, including due to this new criminal offence — if it makes it onto the statute book — going to jail for two years, on top of an unlimited fine, may in future be more likely to disengage, delay seeking help, or avoid bringing their tax affairs into order.”
Integro Accounting’s verdict: good records remain your best defence
Integro Accounting says it acknowledges that HMRC’s proposed new offence for making reckless untrue statements or declarations has “important implications”— notably for “small businesses, accountants, and tax advisers.”
But its boss emphasised that it’s not law, and that most directors following the law needn’t fret.
Speaking from Integro’s Leighton Buzzard HQ (Integro’s other offices are in Gloucester, Cheltenham and London), managing director Christian Hickmott said: “While this remains a consultation rather than law, with responses due by August 16th, it does signal a clear direction of travel towards greater accountability and scrutiny within the direct tax system.
“Whatever the outcome of the consultation, businesses that maintain strong records, document key decisions and seek advice when needed will be best placed to demonstrate reasonable care and withstand future HMRC scrutiny.”
