HMRC have opened a consultation on proposals to introduce a criminal offence for making reckless untrue statements or declarations in relation to direct tax matters including income tax, corporate tax and capital gains tax. This is intended to create consistency with similar provisions which are already in place for indirect tax and deter reckless behaviour by taxpayers. This would broaden HMRC’s powers and give prosecutors and juries an alternative charge where dishonesty cannot be proved. The new offence would require proof of ‘recklessness’. This is a lower threshold than dishonesty which is the focus of current criminal offences in relation to tax.
It is proposed that the new offence should carry a custodial sentence of up to two years and/or an unlimited fine. It would be for judges to impose a sentence that properly reflects the seriousness of the offence rather than HMRC.
HMRC recognise that making reckless untrue statements or declarations in relation to direct taxes can cause significant harm to the Exchequer and such a proposal will help HMRC work at closing the tax gap.
The proposed offence would be committed when a ‘statement’ or ‘declaration’ is made that is ‘untrue’ (which simply means it is not correct), and the maker of the statement has acted ‘recklessly’. Statements in this context could be written or oral and potentially inclusive of “statements made implicitly by a person’s actions”. This would include individuals and those responsible for tax within entities.
