HMRC's Proposed 'Reckless' Tax Offence: What It Could Mean For You

Tax Queen

Tax Expert @ Pie

3 min read

HMRC opened a consultation on 23 June 2026 proposing a new criminal offence for making "reckless untrue statements or declarations" on direct tax matters, and it closes at 11:59pm on 16 August 2026. The change would affect anyone who files a UK tax return, including sole traders, freelancers, landlords, and contractors, as well as the accountants and advisers who help them, and it applies across the whole of the UK direct tax system.

What This Means For You

If you file a self assessment tax return, the short answer is: possibly, but not for the reasons you might fear.

HMRC has been clear that honest mistakes, misunderstandings, and errors made despite taking reasonable care won't be caught by this new offence. Those will continue to be dealt with through the existing civil penalty system, the fines and interest charges you may already be familiar with if you've ever paid your self assessment tax bill late.

What's changing is the introduction of a criminal offence that sits between an innocent mistake and deliberate fraud. If HMRC can show you were aware a statement on your return might not be true, and you went ahead anyway without a reasonable basis for it, that could now be prosecuted as recklessness, even where dishonesty can't be proven.

What Counts As 'Reckless'?

HMRC has defined recklessness as being aware of the risk that a statement might be false or untrue, and unreasonably proceeding to make it anyway despite that awareness. In plain English: if you knew you weren't sure about a figure or a claim, didn't check it properly, and put it on your return regardless, that's the kind of behaviour the new offence is aimed at.

This isn't a new legal concept. A version of it already exists for VAT under Section 167(1) of the Customs and Excise Management Act 1979 and Section 72(3) of the Value Added Tax Act 1994. HMRC wants to bring income tax, corporation tax, and other direct taxes into line with that. You can read more about how Pie Tax keeps you on the right side of HMRC's rules generally on our homepage.

The proposal covers "all direct tax matters," which HMRC defines broadly enough to include tax returns, claims, declarations, and information given during a compliance check. Sanctions on the table include unlimited fines and up to two years in prison.

Why Is HMRC Doing This Now?

The consultation follows figures showing a UK tax gap of 5.3%, worth around £46.8 billion, for the 2023 to 2024 tax year. It was first announced at the Autumn Budget 2025, and HMRC says the aim is to give prosecutors a middle option, an offence they can use where they can't prove deliberate dishonesty but the behaviour clearly falls short of reasonable care.

It's worth noting the proposal doesn't only apply to taxpayers. Tax agents and advisers who make or facilitate reckless statements on a client's behalf could also fall within scope, which may make some accountants more cautious about signing off on grey areas, including for those already working through Making Tax Digital quarterly updates.

What About Contractors and IR35?

The consultation doesn't mention IR35, umbrella companies, or disguised remuneration by name, and its stated aim is simply to bring direct tax in line with existing VAT offences. Even so, the proposed offence is designed to apply to all direct tax matters, and the definition of a "statement" is broad enough to cover tax returns, claims, and information given during a compliance check.

That leaves an open question for contractors: if a return relies on an IR35 status assessment, or a remuneration structure, that later turns out to be wrong, it's not yet clear where the line between careless and reckless would sit. If this applies to you, it's worth keeping a close eye on how the consultation develops.

What Should You Do Before 16 August?

For most people filing straightforward self assessment returns, taking reasonable care remains the standard it has always been: keep records, double check figures you're unsure about, and don't guess at numbers you could instead verify. That's exactly the kind of reasonable care that keeps you well outside the scope of any reckless offence.

This is also a good moment to check that the way you're recording income and expenses throughout the year would hold up if HMRC ever asked how you arrived at a figure. It's worth noting that this is exactly the same discipline our MTD-compliant software is designed to build in, keeping digital records as you go rather than reconstructing them under pressure later.

If you're already filing digitally, our guide on how to file your MTD quarterly update in the Pie app shows how to keep those figures accurate throughout the year.

For a full sense of what we offer, our Why Pie page sets out how we help sole traders, freelancers, and landlords stay on top of their obligations.

How Pie Tax Can Help

Part of what HMRC now expects is that people question the arrangements they enter into, rather than relying on assumptions. Pie Tax was built with exactly that in mind. Our self assessment tax return app walks you through your income and expenses step by step, so your records are accurate well before your return is due.

Want to see how it works for yourself? Try Pie Tax for free online, or download the app to get your records in order well ahead of the deadline.