NEWS

Criminalising tax mistakes could hit low-income taxpayers

HMRC’s proposal to make it easier to prosecute taxpayers could have a detrimental impact on low-income unrepresented taxpayers, warns the Low Incomes Tax Reform Group (LITRG).

The LITRG has raised concerns that HMRC has failed to fully explain why its proposal for a new criminal offence for providing reckless, untrue statements is needed for ‘direct’ taxes like Income Tax, or how it would decide which cases to prosecute.

At present, HMRC can only seek criminal prosecutions where taxpayers have acted dishonestly. These proposals could make it easier for HMRC to reclassify genuine mistakes as ‘reckless’, meaning cases currently dealt with through civil enforcement could become subject to criminal proceedings.

LITRG says it is unclear how taxpayers could challenge this distinction, and warns that low-income, unrepresented taxpayers could be unintentionally caught out by the plans.

Joanne Walker, LITRG Technical Officer, said: ‘We are not convinced that HMRC has made the case for such a wide-ranging and serious measure. The consequences of these proposals are severe. A two-year prison sentence and an unlimited fine are serious and potentially life-changing sanctions to apply to acts that fall short of dishonesty.

‘We have a real concern about the effect these plans may have on low-income unrepresented taxpayers. They are least likely to be able to afford professional help, so least likely to be able to defend themselves against accusations they have acted recklessly.

‘They are also more vulnerable to being taken advantage of by certain unscrupulous tax advisers who could make false claims for tax relief on their behalf that HMRC could decide to prosecute further down the line.’

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10/09/2026