Make money make sense
Make every penny count. Get the best deals, avoid scams and grow your savings, with expert guidance for only £49 a year.
Join Which? MoneyNew HMRC tax rules could criminalise ‘reckless’ errors – what you need to know
HMRC says genuine mistakes won't be caught, but reckless false statements could lead to a fine or up to two years in prison
With a background in financial journalism across national titles, Ruby loves helping people take control of their money and specialises in pensions, tax, banking and benefits.
Submitting false tax information ‘recklessly’ could become a criminal offence under new powers being considered by HMRC.
While deliberate tax evasion is already illegal, the proposed rules would extend criminal prosecution to ‘reckless’ false statements on direct taxes. However, HMRC says genuine mistakes won't be covered by the new offence.
Here, Which? explains what the proposed rules could mean for you and how to avoid getting caught out.
What are HMRC's proposed new tax rules?
The proposed law would make it a criminal offence to submit false information on direct tax filings through reckless behaviour. This is defined as knowing information might be wrong, but filing it anyway without proper checks.
The plan aims to close a long-standing legal gap under the current tax regime. While making reckless false statements is already a criminal offence for indirect taxes like VAT – which businesses collect on goods and services – no equivalent rule exists for direct taxes such as income or corporation tax, which are paid straight to the government.
If passed, the new law will apply to individuals, corporations, trustees and tax agents, allowing HMRC to prosecute more cases.
HMRC says that if you make a genuine mistake, you won't meet the legal threshold for recklessness under the new criminal offence and won’t be prosecuted.
It says: ‘To be clear, it’s totally incorrect to suggest people who make genuine mistakes will face criminal prosecution. This proposal is clearly aimed at those who make reckless and untrue statements or declarations. We’re now carefully considering all views raised during the recent consultation.’
The proposal follows a separate consultation on penalising taxpayers who fail to correct errors after being identified.
- Find out more: tax reliefs – how to reduce your tax bill
How it would work
Under the plan, prosecutors would get an alternative offence to pursue in some tax cases.
If you're accused of tax evasion but prosecutors cannot prove deliberate dishonesty, they could potentially pursue the lesser offence of making a reckless false statement instead.
However, to secure a conviction, prosecutors would still need to prove beyond reasonable doubt that you there was a risk your statement was false and that it was unreasonable for you to take that risk.
If convicted, you could face an unlimited fine, up to two years in prison or both.
- Find out more: UK income tax rates 2026-27 and 2025-26
What would HMRC class as reckless?
In the consultation, HMRC shared examples of what could be classed as reckless under the proposed offence, as well as behaviour that would fall outside it:
| Category | Scenario | Covered by new offence? | Treatment |
|---|---|---|---|
| Careless | You fail to include a small amount of bank interest because you genuinely misunderstood the rules and didn't suspect your return was inaccurate. | No | Civil penalties only |
| Reckless | You claim a large tax relief without reading the guidance or seeking advice, despite knowing it might not be right and deciding it's 'probably fine'. | Yes | New criminal offence |
| Reckless | You leave income from a second bank account off your return despite suspecting you should declare it and knowing you could easily check. | Yes | New criminal offence |
| Deliberate | You knowingly enter £90,000 as your income when the correct figure is £120,000 to reduce your tax bill. | No (covered by existing offences) | Existing fraud/evasion offence |
Source: HMRC
- Find out more: how to fill in a self-assessment tax return
Could honest taxpayers get caught out?
Tax professionals are raising concerns that HMRC's proposed tax rules could expose honest taxpayers to criminal proceedings for simple, everyday mistakes.
While HMRC maintains that standard errors will not trigger prosecution and that proving recklessness requires a high legal threshold, the Chartered Institute of Taxation (CIOT) warns that the current proposals lack clear boundaries between careless mistakes, reckless behaviour and deliberate wrongdoing.
CIOT director of public policy Ellen Milner stressed that criminal sanctions should be strictly reserved for serious misconduct and that vague boundaries only create anxiety and uncertainty for taxpayers and advisers.
She added: 'If people become worried that ordinary discussions with HMRC or disclosures about uncertain tax positions could expose them to criminal sanctions, that risks discouraging the open and constructive engagement on which the tax system depends.'
The Institute of Chartered Accountants in England and Wales (ICAEW) noted that, while it understands HMRC's argument, it does not support the proposed offence and says HMRC should instead make better use of its existing civil and criminal powers to boost compliance.
- Find out more: how to calculate your tax bill
How to protect yourself
If the new rules go ahead, you would need to be aware of a risk that information was untrue and unreasonably proceed anyway for your behaviour to be considered reckless. Prosecutors would have to prove this beyond reasonable doubt.
Taking reasonable care when completing your return can help you avoid errors. You should:
- Maintain detailed records and paper trails - Keep clear, accurate records supporting every figure on your tax returns. This can help show how you arrived at the figures you submitted.
- Avoid relying on unchecked estimates - Don't submit an estimate without checking whether HMRC allows you to do so. If you need to use a provisional or estimated figure, make this clear and update it where required.
- Seek and document professional tax advice - If your tax situation is complex or uncertain, consult a qualified tax professional. Keep a record of any advice you receive.
- Disclose uncertainties clearly - If you are unsure about a specific tax treatment, provide relevant information to HMRC where appropriate rather than ignoring a known uncertainty.
- Review filings before submitting - Even if an accountant prepares your return, check the numbers thoroughly before signing off. Do not ignore red flags, unresolved questions, or offers that seem too good to be true.
Find out more: Making Tax Digital for income tax
