Responding to a consultation by the UK tax authority on introducing a criminal offence by making reckless untrue statement or declarations in direct tax, the organisation stated it recognised the government’s attempt to strengthen the integrity of the UK tax system.

The global accountancy body argued that HMRC needed to explain why the existing framework – civil penalties for inaccuracies and failure to notify plus criminal offences for fraud and dishonest conduct – are insufficient to deal with the minority of taxpayer behaviour the government is trying to address.

ACCA added that, in principle, targeted sanctions for serious misconduct can lead to greater consistency, proportionality and deterrence across the UK tax framework.

It warned that the well-documented complexity of UK tax legislation and the use of voluntary compliance meant that any new offence would have to be carefully designed and implemented to support honest taxpayers and advisers. Criminal liability must be concentrated on those who consciously disregard risks or act with deliberate dishonesty. 

Glenn Collins, head of technical and strategic engagement, said: “A reassessment of all existing powers is overdue. Piecemeal additions and changes without an evaluation of the current powers HMRC have resulted in issues for HMRC, taxpayers and agents.

“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.”

Joe Fitzsimons, senior manager policy and insights – EEMA & UK, said: “If HMRC were to be given such powers, HMRC would have to provide comprehensive guidance including covering to the extent to which advisors would need to verify client information in order to not be considered reckless.’

“The tax system should support the vast majority of taxpayers who seek to comply voluntarily while targeting those who deliberately abuse the system.  ACCA cautions against designing a system overly shaped by the actions of the worst players. Instead, there should be direct, targeted actions against the criminal abusers of our tax system.”