How HMRC is set to punish tax mistakes with new stealth powers

From April 2028, HMRC plans to require taxpayers to correct past tax return errors once they become aware of them. Under the proposed rules, failing to correct an error could see it treated as deliberate, exposing people who made honest mistakes to the same penalty category as intentional tax evasion.

The highest penalty tier can mean fines of 70 to 100 per cent of unpaid tax and allow HMRC to examine returns going back 20 years; the current careless-error cap is 30 per cent, with a six-year assessment window. HMRC will also be able to issue Customer Correction Notices, and failing to respond properly could create a presumption of carelessness. Tax experts warn that there is no minimum amount for notices and that the 20-year period may exceed the five to six years self-employed people must keep records.