HMRC proposes a new crime for reckless tax errors: what it means
HMRC has proposed a criminal offence for reckless untrue statements on direct tax. Here is what is proposed, what 'reckless' means, and what honest mistakes look like.
Sham Sadiq· 1 min read
HMRC has proposed a new criminal offence for reckless untrue statements on direct tax. It is a proposal, not yet law, and HMRC says honest mistakes are not meant to be covered.
What is proposed
The offence would apply to untrue statements or declarations on direct taxes such as Income Tax and Corporation Tax. VAT and other indirect taxes already have a similar offence. It would cover individuals, companies, trustees and tax agents.
What does “reckless” mean?
In HMRC’s consultation, reckless means knowing there is a risk that a statement might be wrong, and going ahead anyway without proper checks. If prosecutors could not prove deliberate dishonesty, they could use this lesser offence instead.
What about honest mistakes?
HMRC says genuine mistakes, misunderstandings and failing to take reasonable care are not intended to be covered. These would stay a civil matter, such as a penalty. Examples HMRC gave of conduct that could be covered include claiming a large relief without checking the guidance despite suspecting it might be wrong, or leaving out income from an account you suspected you should declare.
Where does it stand?
The proposed maximum is up to two years in prison, an unlimited fine, or both. HMRC’s consultation closed on 16 August 2026 and HMRC is still considering the responses. There is no timetable yet. The Chartered Institute of Taxation has said the boundaries between careless, reckless and deliberate conduct are not clear, and ICAEW does not support the offence.
What to do
Whatever happens, the best protection is accurate records and proper checks before you file. If you report crypto gains or losses, that means:
- Gathering your transactions from every exchange and wallet.
- Checking each disposal and the gain or loss on it.
- Keeping a clear record of how you worked out each figure.
Not sure your records are right? Get in touch with Swabi and we’ll help you get them in order.
This article is general guidance, not personal tax advice.
Sources
This article is general information based on HMRC guidance at the time of writing and isn't personal tax advice. Rules change, so please get advice for your own circumstances.
