Introduction: Why Reckless Untrue Statements Should Worry US Filers in Britain
Reckless untrue statements made to HMRC would become a criminal offence carrying up to two years in prison under proposals published on 23 June 2026. Critically, the prosecution would not need to prove dishonesty. Awareness of a risk that your statement might be wrong would be enough.
That shift matters enormously for Americans in Britain. Furthermore, it matters far more to you than to your British colleagues, for reasons almost no commentary has addressed. You make more declarations to HMRC than they do, about facts that are harder to verify, on forms that ask questions no purely domestic taxpayer ever answers.
The proposal is not yet law. However, treating it as a distant consultation would be a mistake, because the conduct it targets is conduct many cross-border filers engage in every January without recognising it. At TaxYork we already see the pattern that reckless untrue statements would criminalise.
Moreover, there is a second danger that sits entirely outside the UK debate. American law already treats recklessness as wilfulness for foreign account penalties. Consequently, the same facts that would convict you in Britain would multiply your IRS exposure tenfold.
What Counts as Reckless Untrue Statements Under the Proposal
The proposed offence has two elements only. First, a statement or declaration made to HMRC must be untrue. Second, the person making it must have acted recklessly. You can read the full text of the consultation on introducing a criminal offence for reckless untrue statements in direct tax at GOV.UK.
Notably, the scope of "statement" is broad. It captures written statements, oral statements and formal declarations. Therefore a Self Assessment return, a letter to a compliance officer, a claim form and an answer given during a telephone call all fall within the definition of reckless untrue statements if the recklessness test is met.
The offence would cover all direct taxes, principally those administered under the Taxes Management Act 1970. Income tax, capital gains tax and corporation tax are all in scope. Meanwhile, equivalent conduct in relation to VAT has already been criminal for decades, which is the gap HMRC says it wants to close.
What HMRC Actually Proposed on 23 June 2026
HMRC opened the consultation on 23 June 2026 and closed it on 16 August 2026, an eight-week window. Nine consultation questions covered scope, definitions, proportionality and implementation. Accordingly, draft legislation on reckless untrue statements could follow in a future Finance Bill rather than immediately.
Importantly, HMRC has been explicit that the offence should not capture honest mistakes. Genuine errors, misunderstandings and mere carelessness would remain civil matters. Nevertheless, the line between carelessness and recklessness is considerably thinner than most taxpayers assume.
The Recklessness Test and the R v G Standard
HMRC adopts the established criminal law meaning of recklessness from the House of Lords decision in R v G [2003] UKHL 50. Under that test, a person is reckless where they are aware of a risk that exists or will exist, and where in the circumstances known to them it is unreasonable to take that risk.
Two features of that test drive the exposure created by reckless untrue statements. Firstly, the test is subjective as to awareness, so it asks what you actually knew. Secondly, it is objective as to reasonableness, so a court decides whether proceeding was reasonable rather than you.
The practical consequence is uncomfortable. Specifically, a taxpayer who thinks "I am not certain this is right, but I will file it anyway" has arguably satisfied both limbs. In our experience that thought crosses the mind of most cross-border filers at least once every year.
Two Years, an Unlimited Fine and No Monetary Threshold
The proposed maximum penalty for reckless untrue statements is two years' custody, an unlimited fine, or both. Furthermore, the offence would be triable either way, meaning it could be heard in the magistrates' court or before a jury in the Crown Court. HMRC would therefore choose the forum according to seriousness, and Crown Court cases would be sentenced against published guidance comparable to the Sentencing Council guidelines for fraud offences.
No monetary threshold has been proposed. This point deserves emphasis, because every comparable offshore offence currently on the statute book carries one. Consequently, a modest error could in principle found a prosecution where a much larger one currently could not.
A conviction also carries consequences well beyond the sentence. Additionally, professional registrations, directorships, visa applications and United States naturalisation decisions all turn on criminal records, and a conviction can affect ordinary financial and mortgage decisions for years afterwards. Hence the collateral damage from reckless untrue statements frequently exceeds the fine itself.
How This Differs From the Offences Already on the Statute Book
Britain already criminalises offshore non-compliance without proof of dishonesty. Sections 106B to 106D of the Taxes Management Act 1970 create strict liability offences for failing to notify chargeability, failing to deliver a return and delivering an inaccurate return where offshore income or assets are involved. You can read section 106B in full on the legislation website.
Those offences are narrower in three respects, and the contrast explains why reckless untrue statements would represent a genuine escalation. They apply only where unreported tax exceeds £25,000 for the year, a threshold fixed by the 2017 threshold regulations. They are summary only, carrying a maximum of six months. Moreover, they provide an express reasonable excuse defence, as HMRC confirms in its guidance on the criminal offence for offshore tax evaders.
The proposed offence has none of those limits. There is no threshold, the sentence quadruples to two years, and no reasonable excuse defence has been proposed. Instead, the only protection is the recklessness test itself.
At the other end of the scale sit the dishonesty offences, which remain untouched. Fraudulent evasion of income tax carries up to fourteen years, and cheating the public revenue carries life. Therefore reckless untrue statements would fill the middle of a ladder that currently jumps from a six-month summary offence straight to fraud.
Why US Filers in Britain Carry More Exposure Than Anyone Else
A British-only taxpayer with a salary and a rental flat makes perhaps a dozen factual assertions to HMRC each year. An American in Britain makes many times that number, and a far higher proportion of them concern facts that are genuinely difficult to establish. Consequently, the statistical risk of reckless untrue statements is structurally higher for you.
Consider what the residence and remittance pages alone require. You must state day counts, ties, workdays performed abroad, the location of your home, and often a residence conclusion under a statutory test with multiple limbs. HMRC's own Self Assessment guidance treats each of these as a declaration for which you take personal responsibility.
The Declarations Americans Make That Nobody Else Does
Beyond the return itself, US filers routinely make additional statements to HMRC that create exposure to reckless untrue statements. Treaty claims require you to assert a residence position under the double tax convention. Foreign tax credit claims require you to assert what tax another country has actually charged and when you paid it.
Certificate of residence applications, claims to relief on foreign pension contributions and disclosures under HMRC's correction facilities all add further declarations. Furthermore, since July 2025 the duty to self-certify your tax residence to a UK financial institution falls on you personally rather than on the bank. Each certification is a statement.
The difficulty is not dishonesty. Rather, it is that these questions frequently have no clean answer, and the honest response is often "probably, but I am not certain". Under the proposed test, filing on that basis without doing the work to resolve the doubt is precisely what converts uncertainty into reckless untrue statements.
The Transatlantic Trap: Recklessness Is Already Wilfulness to the IRS
Here sits the point that the entire UK commentary has missed, and it is the most expensive point in this article. American law reached the recklessness question years ago and answered it far more harshly than HMRC now proposes.
For civil foreign bank account penalties, United States courts hold that wilfulness includes recklessness. Following the Supreme Court's reasoning in Safeco Insurance Co v Burr, the Third, Fourth, Sixth, Ninth, Eleventh and Federal Circuits have all accepted that a taxpayer acts wilfully where they clearly ought to have known there was a grave risk that an accurate report was not being filed and were in a position to find out easily.
That formulation should look familiar. Notably, it is close to identical in substance to the R v G test HMRC has adopted for reckless untrue statements. Therefore the same conduct, evidenced by the same documents, would satisfy both standards simultaneously.
The financial consequence is severe. A non-wilful failure to file the Report of Foreign Bank and Financial Accounts, explained further in this overview of the FBAR requirement, attracts a penalty of $16,536 per violation. A wilful failure attracts the greater of $165,353 or fifty per cent of the account balance, under the penalty provisions at 31 U.S.C. 5321. Consequently, recklessness is the single most expensive word in cross-border tax.
What a UK Recklessness Finding Does to a Streamlined Certification
The IRS Streamlined Filing Compliance Procedures require you to certify, under penalty of perjury, that your failures were non-wilful. The IRS defines non-wilful conduct as negligence, inadvertence, mistake, or conduct resulting from a good faith misunderstanding of the law.
Recklessness is not on that list, and it is not compatible with it. Accordingly, a UK finding of reckless untrue statements on the same underlying facts would be close to fatal to a Streamlined submission covering those years. A prosecution file would be disclosable, and the narrative statement would have to address it.
The sequencing point is therefore critical. Any American with unresolved doubt about earlier UK or US filings should resolve it before HMRC opens an enquiry, not afterwards. Our IRS Streamlined Filing team runs both analyses together, because a disclosure that fixes Britain while destroying your American position is not a fix at all.
The Statements Most Likely to Go Wrong
Certain declarations account for most of the risk we see, and each is a plausible route to reckless untrue statements. Foreign income reported net of foreign tax rather than gross heads the list. Additionally, many clients report the sterling equivalent using a rate chosen for convenience rather than one HMRC accepts.
Structures cause the second cluster of problems. American filers frequently hold interests in limited liability companies, S corporations and partnerships whose UK characterisation differs sharply from their US treatment. Assuming a structure is transparent in Britain because it is transparent in America is exactly the sort of unexamined assumption that produces reckless untrue statements.
Timing produces the third cluster. Britain runs a tax year to 5 April while America uses the calendar year, so foreign tax credit claims frequently rest on figures that have not yet been finalised. The IRS explains the mechanics in its guidance on the foreign tax credit. Filing a provisional figure is acceptable; asserting it as final without saying so is not.
Finally, account reporting causes persistent difficulty. Reporting under FATCA means HMRC and the IRS exchange data annually, and the FATCA reporting rules mean discrepancies surface automatically. Our FBAR and FATCA reporting work begins by reconciling both sides before either is filed.
What Changes for Advisers as Well as Taxpayers
The proposed offence would apply to agents who make reckless untrue statements on a client's behalf, not only to taxpayers. That is a significant extension, and it will change adviser behaviour in ways clients should anticipate.
Expect more written questions, more requests for source documents, and more refusals to file on instruction alone once reckless untrue statements carry a custodial sentence. Furthermore, expect advisers to record their reasoning far more carefully. In practice, an adviser who cannot evidence why a position was taken cannot easily demonstrate the absence of awareness of risk.
There is a corresponding benefit for clients who engage properly. Specifically, documented reliance on considered professional advice is powerful evidence against recklessness, because it negates the awareness limb of the test. Therefore the file you build now is the defence you deploy later.
Practical Steps to Take Before the Offence Arrives
Start by identifying every statement you make to HMRC in a normal year, not merely the return. Then, for each one, ask whether you could presently evidence the basis on which you made it. Anything you cannot evidence is where reckless untrue statements exposure sits.
Next, review the open years. Britain can assess offshore matters for up to twelve years, and HMRC's requirement to correct guidance sets out how historic offshore non-compliance is treated. Consequently, positions taken years ago remain live.
Where you find a genuine problem, disclose it before HMRC finds it. The Worldwide Disclosure Facility handles offshore corrections, while cases involving deliberate conduct route through the Contractual Disclosure Facility under Code of Practice 9. Notably, an unprompted disclosure attracts materially lower penalties than a prompted one, and it removes the prosecution risk entirely.
Finally, align both jurisdictions before you file either. Our US tax return preparation for expats and US-UK tax treaty positions services are delivered together for precisely this reason.
Case Study: A Mayfair Fund Principal and a £312,000 Correction
David is a US citizen and UK resident who is a principal at a credit fund in Mayfair. He holds a Delaware limited liability company through which he receives certain fee income, alongside a US brokerage account that peaked at $4.2 million. He filed UK returns for three years treating the company as transparent in Britain because it is transparent in America.
That assumption was wrong, and the resulting underpayment across 2022/23 to 2024/25 came to £312,000. Critically, David admitted to us that he had wondered whether the UK treatment matched, had raised it once, and had filed anyway when no clear answer came back. Under the proposed test, that admission describes awareness of a risk and an unreasonable decision to proceed.
The American exposure was worse. Applying the recklessness formulation the US courts use, the same admission would support a wilful foreign account penalty of the greater of $165,353 or half the balance, which on a $4.2 million account means roughly $2.1 million for a single year. Moreover, it would have made a non-wilfulness certification unsustainable.
We rebuilt the file rather than the return. Contemporaneous emails showed David had in fact received written advice confirming the transparent treatment, which he had forgotten and never passed on. That evidence negates awareness of an unreasonable risk, and it reframes the conduct as careless rather than reckless.
We then disclosed to HMRC through the Worldwide Disclosure Facility as an unprompted correction. The result was a careless-behaviour penalty of thirty per cent, or £93,600, with no criminal exposure and no threat of reckless untrue statements had the offence been in force. Furthermore, the American position remained defensibly non-wilful, which preserved roughly $2 million of penalty exposure.
How TaxYork Can Help With Reckless Untrue Statements
We prepare and defend cross-border positions on both sides simultaneously, which is the only way this exposure can be managed. A UK adviser who cannot see the American consequences will settle a UK enquiry on facts that devastate your IRS position. Consequently, our cross-border tax planning team reviews both before anything is filed or conceded.
Our work on reckless untrue statements covers reviewing open UK and US years for exposure, building the contemporaneous evidence file that defeats the awareness limb, preparing Worldwide Disclosure Facility and Streamlined submissions in the correct sequence, and reconciling FATCA data before HMRC does it for you. Additionally, we handle correspondence so that nothing said in a routine reply becomes evidence later.
We act for fund principals, bankers, company owners and families across London who file in both countries. In our experience, the clients who fare worst are not the dishonest ones. Rather, they are the ones who knew something was uncertain and filed anyway.
Conclusion
Reckless untrue statements would criminalise a state of mind that many cross-border filers occupy every January. HMRC proposes two years' custody and an unlimited fine, with no monetary threshold and no reasonable excuse defence, for conduct that today attracts only a civil penalty. Meanwhile, the recklessness standard it imports is already the American test for wilful foreign account failures, so the same facts detonate in both jurisdictions at once.
The consultation closed on 16 August 2026 and legislation has not yet been drafted. Therefore you have a window, and the right use of it is evidence rather than anxiety. Above all, resolve your uncertain positions now, document why you took them, and never file a figure you privately doubt.
Contact Us
If you hold uncertain cross-border positions or have doubts about earlier filings, we would welcome an early conversation. Please contact us for a confidential review, or book a consultation with one of our US-UK specialists.
Email hello@taxyork.com or telephone 020 3488 8606. We respond to every enquiry within one working day.
Disclaimer
This article provides general information about HMRC's proposed offence for reckless untrue statements and related US reporting obligations. It does not constitute tax or legal advice and should not be relied upon in isolation. The proposal remains a consultation and may change before any legislation is enacted. Please obtain professional advice tailored to your circumstances before acting. TaxYork accepts no liability for decisions taken on the basis of this article.
Written by the TaxYork Expert Team — US-UK tax specialists.