On 23 June, buried in HMRC's Tax Update 2026, there was a consultation most of my clients will never read and every one of them should care about. The government wants to make it a criminal offence to file a reckless untrue tax return.
Here is my view up front, before the word "criminal" does what it always does to people. This is not the overreach the headlines will make it. It is the missing rung on a ladder HMRC has been building for two years, and the new rung happens to be criminal. Most people will hear "reckless" and assume it means the same thing as "careless." It does not, and the gap between those two words is the whole story.
TL;DR: HMRC is consulting on a criminal offence of reckless untrue declarations for direct tax, closing 16 August 2026. "Reckless" sits between an honest mistake and outright fraud: knowing your figure might be wrong and filing it anyway. Good contemporaneous records now separate careless from criminal, so they matter more than they did a week ago.
What is HMRC actually proposing?
A new criminal offence of making a reckless untrue declaration or false statement for direct tax, meaning Income Tax and Corporation Tax. The consultation opened on 23 June and closes on 16 August 2026 (CIOT, 2026). It was first trailed at Budget 2025, so it has been coming.
The point is consistency. A reckless-statement offence already exists for indirect taxes like VAT, but not for direct tax (GOV.UK, 2026). For Income Tax and Corporation Tax the only criminal route today is fraudulent evasion, which forces prosecutors to prove dishonesty, and dishonesty is hard to prove. The new offence gives them an alternative charge for the cases that currently slip between a civil penalty and a fraud prosecution.
Careless, reckless, dishonest: what is the difference?
Three boxes, and the new offence adds the middle one. Careless is failing to take reasonable care: an honest person trying and falling short. Reckless, on HMRC's proposed test, is that the maker "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" (CIOT, 2026). Dishonest is fraud: you knew it was false and meant to cheat.
The difference between careless and reckless is awareness. Careless does not know. Reckless knows there is a real risk and presses the button anyway. The shapes I can already picture from practice are the client who "estimates" a turnover figure he could easily have checked, or the director who signs accounts knowing the loan account narrative does not add up. Neither is fraud. Both could, on a reckless test, stop being merely penalised at up to 30% (GOV.UK, CH81140) and start being charged.
Who should actually worry about this?
Almost nobody who reads this, and that is worth saying plainly so it does not become scaremongering. The offence is aimed at "highly culpable serious non-compliance," not at the client whose return contains a genuine error. The numbers back that up: the 2024-25 tax gap was £59.2bn, and 35% of it was failure to take reasonable care against just 12% evasion (GOV.UK, 2026). Most wrong returns are honest people getting it wrong, and this offence is not for them.
What it does is raise the standard of care in direct tax to where VAT already sits. The best protection against ever being mistaken for reckless is the thing I bang on about constantly: contemporaneous records and a file note showing the question was asked and a reasonable basis reached. Recklessness is, almost by definition, the absence of that. The same discipline I tightened after the sanctionable-conduct regime and the ICAEW credible-basis test does double duty here.
What I am changing in the file
Less than you might think, because the habits are already there from the AML and ethics changes this year. Where a figure is an estimate, I label it as one and write down the basis. Where a position is grey, the credible-basis note already lives in the file. And where a client wants to proceed against my advice, I want that in writing, because "I told them and they did it anyway" is exactly the evidence that keeps a reckless allegation off both of us.
This is a consultation, not law. There is nothing to do by a deadline, and clients with their records in order have nothing to fear. But the direction of travel is clear, and the same logic that bit a director on a careless penalty in the Boulton case is moving up the ladder. The system is shifting from "did you try?" to "did you knowingly take a risk with the truth?" The people who treat a return as something you sign carefully and evidence properly were always right to, and they have just been told so two years early.
Frequently Asked Questions
What is the proposed new criminal offence for direct tax?
A consultation published on 23 June 2026 proposes a criminal offence of making a reckless untrue declaration or false statement for direct tax, meaning Income Tax and Corporation Tax. It mirrors an offence that already exists for indirect taxes like VAT, and it closes on 16 August 2026. It is at consultation stage and is not yet law.
What is the difference between a careless and a reckless tax return?
Careless means failing to take reasonable care: an honest mistake, currently dealt with by a civil penalty of up to 30% of the lost tax. Reckless means you were aware there was a real risk your statement was untrue and filed it anyway without doing anything about it. The dividing line is awareness of the risk, and the proposed offence would make the reckless version a criminal matter.
Could I be prosecuted for a tax return that turns out to be wrong?
Not for a genuine error. The proposed offence targets "highly culpable serious non-compliance," and most wrong returns are honest mistakes, not fraud or recklessness. The best protection is contemporaneous records showing how you reached each figure, which is what separates a careless slip from a reckless one.
If you are unsure whether a position in your accounts or return is properly evidenced, get in touch. I am happy to run through where your file sits and what is worth tightening before any of this becomes law.