I have to put in my 2 cents..I have an 8 year old grandson that is just like his dad.
He has not been around him (his dad)much at all in his life and he's just like him to a T.
He lies and makes up stories all the time..all we do is call him out on it and point out to him that we know he is telling a lie and make him own up to it.
You can't let them get away with it when they are so young ..you got to let them know that it's not acceptable and there will be repercussions from lying.