ACCA welcomes the opportunity to provide to respond to the consultation issued by HMRC on Introducing a criminal offence for making reckless untrue statements or declarations in direct tax. ACCA has over 100,000 members working in accountancy and finance roles across the UK. As a chartered professional body, we operate in the public interest; our members operate across a broad range of sectors, public and private, from micro businesses to large firms.

We recognise the Government’s objective to strengthen the integrity of the tax system, and agree, in principle, that targeted sanctions for serious misconduct can lead to greater consistency, proportionality, and deterrence across the UK tax framework. However, the complexity of tax legislation and the use of voluntary compliance mean that any new offence must be carefully designed and implemented to support honest taxpayers and advisors, while concentrating criminal liability on those who consciously disregard risks or act with deliberate dishonesty.

ACCA would make the following suggestions:

• We believe HMRC must clearly demonstrate why the existing framework, including civil penalties for inaccuracies and failures to notify, alongside existing criminal offences for fraud and dishonest conduct, are insufficient to deal with the behaviour that the government are seeking to address.
• Following this consultation work we believe HMRC should conduct a reassessment of this work and outline a roadmap for review of the tax administration framework, which is overdue. Piecemeal additions and changes to the tax system without an evaluation of the current powers HMRC have are likely to result in issues for HMRC, taxpayers and Agents.
• We believe that criminal liability should only arise where an individual consciously disregards an obvious and unjustifiable risk that a statement is false. It should not arise because a taxpayer, or professional advisor, has reached a reasonable interpretation of uncertain legislation, or made a genuine error while having taken all reasonable care possible.
• We would also highlight the importance of comprehensive guidance from HMRC, particularly in relation to the extent to which advisors would need to verify client information in order to not be considered reckless.
• Given that HMRC has these powers for indirect tax we are confused why HMRC has not provided evidence of their use and effectiveness as part of the consultation. These existing provisions mean that, for indirect taxes, it is possible to prosecute individuals who make untrue statements or submit incorrect documents either knowingly or recklessly, without the need to prove dishonesty. The penalties for such offences can be severe, including substantial fines and imprisonment.
• Given that the new reckless behaviour would sit between two known and currently used behaviours we would have expected HMRC to produce evidence from its existing compliance work on why this new power is needed.

To read the response in full, please download the response document found on this page.