The Government has published a consultation on the introduction of a criminal offence of reckless untrue declarations or reckless false statements for direct tax.
The change would bring direct tax rules in line with existing indirect tax offences which give prosecutors an alternative charge in cases where dishonestly cannot be proven.
Direct taxes include income tax and corporation tax. Currently, whilst it is an offence to fraudulently evade both direct tax and indirect tax, an offence for making reckless statements or declarations only exists for indirect taxes.
The consultation follows a promise in the Autumn Budget to tackle ‘recklessness’ in direct tax.
Alistair Culverwell, head of tax dispute resolution at Forvis Mazars, said the new tax offence would be a significant upgrade to HMRC’s toolkit.
He said: “This proposed policy is part of a wider trend of the government and HMRC taking a much tougher stance against taxpayers who don’t pay the correct amount of tax.
“The increased risk of criminal investigation and potentially prosecution would bring the UK into closer alignment with other jurisdictions, such as Spain, where a number of high profile individuals have been prosecuted for tax offences.
“This appears to be part of the government’s wider strategy to influence taxpayer behaviour to increase compliance and reduce the tax gap with potentially serious sanctions when things go wrong.”
The HMRC consultation will run to 16 August.