New duty to correct tax errors from April 2028 explained

From 1 April 2028 taxpayers who discover a mistake in a tax return will be under a statutory duty to put it right. If they do not take reasonable steps to correct it, or to tell HMRC, the law will treat the inaccuracy as deliberate. At the same time HMRC gets a new power to send a Customer Correction Notice asking a taxpayer to check a suspected error and either fix it or explain why nothing needs fixing. Budget 2026 confirmed both measures for Finance Bill 2026-27.

What was announced

HMRC published draft legislation in July 2026 and consulted on it until 7 September. Budget 2026 confirms it will be legislated, with effect from 1 April 2028. HMRC’s tax information and impact note says the measure affects “taxpayers who submit tax returns or other documents to HMRC, and tax advisers who provide professional tax advice or services to those taxpayers”.

It has two parts.

1. A duty to correct

Under draft new Schedule 24A to Finance Act 2007, where a person has given HMRC a document of the kind covered by the inaccuracy penalty rules, and they later become aware that it contains an inaccuracy that can still be corrected, they must take reasonable steps to secure that it is corrected. Reasonable steps are:

• correcting the inaccuracy, if the person is able to correct it, for example by amending a return
• otherwise, informing HMRC

The duty only applies while the inaccuracy can still be corrected, which the impact note links to HMRC still being within the existing statutory time limits for assessments. If the person does not comply, the inaccuracy is treated as deliberate for the purposes of penalties and assessment time limits.

That is a significant change. Under the current rules, an innocent error that is later discovered but not reported is treated as careless. The draft legislation removes that rule and replaces it with the duty to correct, so the consequence of sitting on a known error moves from careless to deliberate. Deliberate inaccuracies attract higher penalties and longer assessment time limits.

2. Customer Correction Notices

HMRC will be able to issue a correction notice where it has reason to suspect that a document contains an inaccuracy that can still be corrected. The notice will specify the suspected inaccuracy, or the kind of inaccuracy, and require the taxpayer, by a deadline, to either:

• take reasonable steps to correct it, or
• explain why the document does not contain it

There is an incentive to respond. A taxpayer who has not had a correction notice in the previous six years, and who takes reasonable steps to correct the inaccuracy by the notice deadline, will not be liable to a penalty for a careless inaccuracy. If the taxpayer does not comply with a notice, the inaccuracy is presumed to be careless unless it was deliberate or the taxpayer shows HMRC, or a tribunal, that they took reasonable care.

Why it is being introduced

The measure grew out of HMRC’s 2024 consultation on new ways to tackle non-compliance and its July 2025 Transformation Roadmap, which promised to modernise HMRC’s compliance powers. HMRC says the aim is to make correcting errors simpler and quicker than opening enquiries or making discovery assessments. The impact note says the Exchequer effect will be set out at a future fiscal event, and HMRC expects IT costs of about £5 million.

What it means for accountants

Engagement letters and procedures need updating. When a practice finds an error in a client’s past return, the client will have a statutory duty to correct it, with a deliberate behaviour outcome if they do not. Practices should review how they record the discovery of errors, how they advise clients, and what happens if a client refuses to correct. Professional conduct guidance on disclosure already applies, but the stakes for the client rise sharply.

Keep evidence of reasonable steps. For each error found, keep a record of when it was identified, what was done and when HMRC was told. That record will be the client’s defence against a deliberate finding.

Treat Customer Correction Notices like a deadline, not a letter. HMRC already sends informal letters inviting people to check their returns. A correction notice will be a statutory notice with consequences. Responding on time can remove a careless penalty, while ignoring it shifts the burden onto the client to prove reasonable care. Practices should make sure notices sent to clients reach them quickly.

Know the time limits. The duty only bites while HMRC can still assess, so the usual four, six and twenty year windows remain central. A deliberate finding brings the longest window into play.

Plan for online amendments. From the same date, 1 April 2028, amended company tax returns must be filed online, subject to exceptions. See Corporation Tax in Budget 2026.

For HMRC’s other compliance measures, see HMRC compliance and enforcement changes in Budget 2026. Our guides to HMRC penalties and Self Assessment amendments cover the current rules.

Frequently asked questions

When does the duty to correct tax errors start?

The legislation becomes operative on 1 April 2028. It will be included in Finance Bill 2026-27.

What counts as reasonable steps to correct an error?

Under the draft legislation, reasonable steps means correcting the inaccuracy if you are able to, for example by amending a return, and otherwise informing HMRC.

What happens if I find an error and do nothing?

If you become aware of an inaccuracy that can still be corrected and do not take reasonable steps, it will be treated as deliberate for penalty and assessment time limit purposes.

What is a Customer Correction Notice?

A new statutory notice HMRC can issue where it has reason to suspect an error. It requires you, by a deadline, to correct the inaccuracy or explain why there is none. If it is your first notice in six years and you correct the error in time, no careless inaccuracy penalty applies.