HMRC has proposed a new power to force landlords and other taxpayers to revisit suspected errors in returns, with draft legislation showing uncorrected mistakes could be treated as deliberate if owners fail to act after becoming aware of them.
The change, published in the government’s draft Finance Bill 2026-27 papers, would introduce a formal Customer Correction Notice. That would let HMRC require a taxpayer to review a return, correct an inaccuracy, make a disclosure or explain why no correction is needed. Ministers have not yet brought the measure into force, but the direction of travel is now much clearer.
For landlords, that matters now because tax compliance is already getting heavier under Making Tax Digital and wider HMRC scrutiny. Even where an error begins as an innocent mistake, the draft rules show the risk rises sharply if it is spotted later and not dealt with quickly.
Customer Correction Notice would raise the stakes
According to the draft policy paper, the reform would make explicit a taxpayer’s obligation to take corrective action once they become aware of an inaccuracy in a return or related document. It would also give HMRC a new notice power where it has reason to suspect something submitted is wrong.
That matters because the consequences go beyond a polite nudge. The government says that where a taxpayer becomes aware of an inaccuracy and does not take reasonable steps to correct it or notify HMRC, the error could be treated as deliberate for penalty and assessment time-limit purposes. In practice, that means a mistake that may once have sat in a four-year window could move into a much longer compliance risk if it is ignored.
This follows Landlord Knowledge’s report on 118,000 landlords being pulled into quarterly tax reporting under Making Tax Digital. The latest proposal suggests HMRC is not just digitising reporting – it is building a firmer framework for chasing corrections once errors come into view.
Landlords may need tighter review and record-keeping
For buy-to-let investors, the practical issue is not only whether returns are accurate on filing day. It is whether records, explanations and follow-up checks are strong enough if HMRC later raises a query. Landlords with multiple properties, mixed personal and rental costs, or historic self-assessment habits may face more exposure if their record-keeping is weak.
That is especially relevant after HMRC’s recent enforcement push. As Landlord Knowledge recently reported on HMRC recovering a record £107 million from landlords through the Let Property Campaign, the department is already showing a harder edge on undeclared or misreported property income. The new correction notice regime would add another formal step between suspicion and penalty.
The draft legislation is still under technical consultation, so details could change. But the main message is already plain: landlords who spot a problem in an old return should not assume silence is the safer option. The government paper on modernising the correction of errors says the aim is to create clear expectations and use the penalty system to push faster self-correction.
There is also a timing angle here. The measure has no operative start date yet, but it sits alongside a wider HMRC compliance drive that landlords are already feeling through digital reporting changes, disclosure campaigns and closer review of property income. Waiting until the rules are live may leave some owners with less room to tidy up historic issues calmly.
What this means for landlords
- If you have spotted an old tax error: take advice early rather than hoping it stays buried.
- If you self-file: review how clearly you separate rental income, allowable costs and personal spending.
- Watch for: the final Finance Bill wording and any confirmed commencement date for Customer Correction Notices.
- If Making Tax Digital is approaching for you: better digital records may reduce the risk of later correction disputes.
- Bottom line: HMRC is signalling that innocent mistakes become more dangerous once they are known and left uncorrected.
Editor’s view
Landlords do not need a panic response to draft legislation, but they do need to read the mood. HMRC is making it clear that passive errors are one thing and ignored errors are another.
Author: Editorial Team – UK landlord & buy-to-let news, policy, and finance
Published: 3 August 2026
Sources: GOV.UK, ICAEW, HMRC
Related reading: HMRC confirms 118,000 landlords face quarterly tax reporting from April
