Tax return mistakes: a duty to fix them planned for 2028

From 1 April 2028, anyone who finds a mistake in a tax return they have already sent HMRC will be under a legal duty to correct it, under plans confirmed at the Budget. If you know about an error and do not take reasonable steps to correct it or tell HMRC, it will be treated as deliberate, both for penalties and for how far back HMRC can go. The change is due in the Finance Bill 2026-27, so it is not yet law.

What the new rules would say

• Once you become aware of an inaccuracy in a return or document, you must correct it, or tell HMRC if you cannot correct it yourself.

• The duty applies only while HMRC is still within its existing time limits for assessing that year.

• HMRC gets a new Customer Correction Notice. It requires you to check your position and then correct the error, make a disclosure, or confirm that nothing needs fixing.

• A careless error carries no penalty if you disclose it before HMRC prompts you, or if you take reasonable steps to correct it after your first Customer Correction Notice in six years.

• If HMRC later finds an error you did not fix after a notice, it is presumed careless, unless it was deliberate or you can show you took reasonable care.

HMRC's note on the measure sets these out. The draft law was consulted on over the summer.

Why "deliberate" matters

Penalties depend on behaviour. Under HMRC's penalty factsheet, a careless error you tell HMRC about before it prompts you can carry a penalty of anything from nothing to 30 per cent of the extra tax. A deliberate one, without concealment, starts at 20 per cent and can reach 70 per cent, and if HMRC has already prompted you, the floor is 35 per cent.

Today, an honest mistake that you later discover and do nothing about is treated as careless. Under the plans, from April 2028 it moves up a category, to deliberate.

A landlord in Harrow

Illustration, not a real client. In May 2028 a landlord in Harrow, a higher rate taxpayer, realises his 2026 to 2027 tax return left out £5,000 of rental profit. At 40 per cent, that is £2,000 of tax. The draft law does not yet say whether the duty reaches returns sent before April 2028, and this example assumes it does.

• He amends the return straight away. He can do it online until 31 January 2029, twelve months after the filing deadline. A careless error he discloses before HMRC prompts him carries no penalty under the new rules. He pays the £2,000 plus interest.

• He leaves it. If HMRC then finds it, the error counts as deliberate. Even if he cooperates fully once HMRC has asked, the penalty is at least 35 per cent, £700, and could reach £1,400, on top of the £2,000 and interest.

The rules cover most returns and documents you send HMRC, including VAT returns and company tax returns, not only Self Assessment.

What to do now

Nothing changes before April 2028, and correcting a mistake as soon as you find it already brings the lowest penalties. If you know of an error in an earlier return, deal with it now, while the rules are the ones you know. Our page on voluntary disclosures and HMRC checks explains how a disclosure works.

About the author

Harvey Dhillon is Founder and CEO of Zmartly, an accountancy firm for small businesses. He grew up in West London and began his career in finance at Barclays, in investment banking and wealth management, before going full-time on Zmartly in 2020.

Featured photo by RDNE Stock project on Pexels.