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HMRC Wants A New Legal Duty To Correct Your Own Tax Mistakes

ended 17. July 2026

An honest mistake in a tax return has never, by itself, been a crime. Draft legislation published by HMRC on 13 July 2026, on Legislation Day for the Finance Bill 2026-27, would change the machinery around that mistake. For the first time it creates a positive legal duty on the taxpayer to correct errors identified in a return or document provided to HMRC, backed by a brand-new HMRC power to issue a "customer correction notice". The measure is titled "Modernising the correction of errors" and is presented as simplification. Here is the part worth reading twice: the legal burden of spotting and fixing an error would sit with the taxpayer, and the small business, landlord or self-employed person filing their own return is the one most likely to feel it. This is not law. It is draft legislation out for technical consultation, which closes on 7 September 2026, and the page does not yet state which taxes are in scope or when it would commence.

  1. Is turning the correction of an honest error into a positive legal duty a sensible modernisation, or a quiet shift of risk onto the taxpayer?
  2. With a new "customer correction notice" power on the table, who is hit hardest, the well-advised or the sole trader and landlord filing alone, and is that fair?
  3. What should people do before this commences, and should anyone respond to the consultation by 7 September? Do you have a client whose filing this would change? If so, please give as much colour and detail as possible.


 

3 responses from the Newspage community

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Editor
Harvey DhillonVerified
Founder & CEO at Zmartly
On HMRC's own figures, more of the tax gap comes from a failure to take reasonable care and honest error, 35 and 16 per cent of it, than from deliberate evasion, which is 12 per cent. So it matters that a measure sold as simplification would, for the first time, put a positive legal duty on you to correct errors HMRC has identified in your return, and give it a new power to issue a "customer correction notice". This is draft legislation, open for technical consultation until 7 September 2026. It is not law, and it does not yet say which taxes it covers or when it starts. An honest mistake is not a crime, but fixing it is about to become a legal duty. The person who feels this is not the planner who games the rules, but the sole trader or landlord filing their own return. So read the consultation while you can still shape it, and if the wording worries you, say so before September. Know the duty before it commences.

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Editor
Tony RedondoVerified
Founder at Cosmos Currency Exchange
Whatever happened to "innocent until proven guilty"? HMRC's shift turns simple hesitation or procrastination after discovering an error into a serious tax offence, triggering penalties of up to 100% and a 20-year audit window. Corporate tax teams will manage this easily. Sole traders and landlords will be hit hardest. For them, hesitation or anxiety on finding an error is now legally equated with tax evasion. Administrative paralysis in the face of a hopelessly complex tax system is treated with the same statutory severity as deliberate evasion. Advisers have until the technical consultation closes on 7 September to lobby against the automatic "deliberate" trigger. Once this is live, taxpayers must correct errors immediately, otherwise procrastination becomes a costly legal liability.
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Editor
Nouran MoustafaVerified
Practice Principal & IFA at Roxton Wealth
HMRC cannot demand tax literacy only when there is money to collect. Correcting a known error is reasonable, but calling a new legal duty and notice power “simplification” risks disguising a transfer of responsibility from the system onto the individual.

The well-advised will cope. The people most exposed are sole traders, landlords and self-employed workers completing returns alone, navigating rules even professionals debate.

There is a wider hypocrisy here. We punish people for misunderstanding tax, yet tolerate a lack of financial education that leaves millions unsure about pensions, investing and retirement. Some will avoid pension contributions because they do not understand the benefits, then depend more heavily on the state later.

Before commencement, people should retain records and correct issues quickly. But HMRC must pair enforcement with accessible guidance, proportionate safeguards and a genuine chance to fix honest mistakes. Responding to the consultation matters.