Can We Fix It? Yes, We Must! HMRC’s New Error Correction Powers

The Government has published draft legislation on its long-trailed “Modernising the Correction of Errors” proposals, and the message to taxpayers is clear: if you spot an error in your tax return, it is now squarely your job to put it right.

HMRC’s published tax gap figures consistently identify careless errors by individuals and small businesses as the largest single contributor to the tax gap. These proposals are a direct response – an attempt to close that gap by making self-correction an explicit legal obligation rather than a mere expectation.

What’s changing?

Two new mechanisms are being introduced. The first is a general taxpayer obligationto take corrective action whenever a taxpayer becomes aware of an inaccuracy in a return or document submitted to HMRC. That means either amending the return directly or, where that is not possible, notifying HMRC. The obligation bites where existing statutory time limits for amendments or assessments still apply.