HMRC is set to send out letters to British households warning them to take action over tax errors – and there are concerns that 200% penalties could be issued.
As reported by Step.org, draft legislation published by HMRC means that it will be taxpayers’ responsibility to correct errors when they have been discovered.
The measure, part of the Finance Bill 2026/27, also gives HRMC a new power meaning it can force taxpayers to check their position and either correct errors or explain why no corrections are needed.
Currently inaccuracies will only be seen as deliberate when a taxpayer knowingly provides HMRC with a document that contains an error in something that is intended to be an accurate document.
The new legislation will be under consultation until September 2026.
Step.org says: “It closely resembles the Requirement to Correct (RTC) duty introduced by the Finance (No. 2) Act 2017, which required taxpayers with undeclared offshore tax liabilities to self-correct by a fixed date, with penalties of up to 200 per cent.
“The new duty, whose commencement date is not yet specified, will extend a similar principle across the entire tax system.
“The proposed new powers have attracted some criticism from law firms. Notably, failure to comply with the new duty to correct means the inaccuracy is treated as deliberate for penalty purposes under Schedule 24 of the Finance Act 2007.
“This significantly increases potential penalty exposure, says law firm Eversheds Sutherland, attracting penalties that are calculated as a higher percentage of the potential lost revenue (based on deliberate behaviour) rather than lower penalty rates for careless behaviour.”
A ministerial statement on the new legislation says the plans will “resolve simple, common issues more quickly and proportionately and improve consistency and fairness by setting a clear expectation that customers self-correct errors”.