New obligations to correct tax errors

New obligations requiring taxpayers to correct inaccuracies in tax returns and other documents submitted to HMRC are expected to take effect from 1 April 2028. The measures, announced in the Autumn Budget 2026, will introduce an explicit legal requirement for taxpayers to take corrective action once they become aware of an error. HMRC will also receive a new power to issue Customer Correction Notices, requiring taxpayers to review their tax position and either correct an inaccuracy or explain why no correction is necessary.

 Under the proposed rules, taxpayers who identify an inaccuracy must take reasonable steps to correct it or notify HMRC where a direct amendment is not possible. This obligation will apply only while the taxpayer or HMRC remains within the relevant statutory time limits for amending returns or making assessments. Where a taxpayer becomes aware of an error but fails to take reasonable corrective action, the inaccuracy may be treated as deliberate for penalty purposes and the application of assessment time limits.

HMRC will be able to issue a Customer Correction Notice where it has reason to suspect an inaccuracy. The taxpayer must respond by correcting the error, making an appropriate disclosure or confirming that no correction is required. Failure to take appropriate action could result in more serious penalty consequences.

The proposed rules also include safeguards for taxpayers who take reasonable corrective action. Where a taxpayer responds appropriately to their first Customer Correction Notice within a six-year period, penalties for inaccuracies will apply only to deliberate errors. However, inaccuracies subsequently identified by HMRC when reviewing a correction, or the absence of a correction, following a notice will generally be presumed careless unless the error was deliberate or the taxpayer can demonstrate that reasonable care was originally taken.

 The changes are intended to encourage taxpayers to correct errors promptly and reduce the need for formal HMRC enquiries. Businesses and individuals should ensure they have procedures for identifying and correcting inaccuracies in previously submitted returns and documents.