Policy paper

Modernising the correction of errors — general taxpayer obligation and HMRC customer correction notice

Published 13 July 2026

Who is likely to be affected 

Taxpayers who submit tax returns or other documents to HMRC, and tax advisers who provide professional tax advice or services to those taxpayers. 

General description of the measure 

This measure introduces new requirements to correct inaccuracies in returns or documents provided to HMRC. It makes explicit the obligation on taxpayers to take action to correct errors once they are identified. It also gives HMRC a new power to issue a Customer Correction Notice, which requires the taxpayer to check their position and either correct the inaccuracy or explain why no correction is needed.  

Policy objective 

The policy aims to improve compliance by requiring customers to correct errors once they become aware of them, thus enabling HMRC to focus compliance resource on more complex non-compliance. It seeks to achieve this by establishing clear expectations and providing incentives through the penalty system. 

Background to the measure 

In autumn 2024 the government published a consultation on new ways to tackle non-compliance. The summary of responses, published in spring 2025, committed to exploring more efficient approaches to taxpayer self-correction. 

This commitment was reinforced in the Transformation Roadmap, published in summer 2025, which set out plans to modernise HMRC’s compliance powers, including developing a customer correction power. 

At Budget 2025, the government also confirmed that it would publish draft legislation in 2026 on enhancing HMRC’s compliance powers to ensure taxpayer errors in tax returns are corrected. 

Detailed proposal 

Operative date 

The measure will take effect on or after an appointed day in the future.    

Current law  

HMRC’s enquiry and assessment powers are contained in sections 9A and 12AC of the Taxes Management Act 1970 and paragraph 24 of Schedule 18 to the Finance Act 1998. 

HMRC’s powers to make amendments and assessments, and the applicable time limits, are set out in sections 9ZB, 29, 34 and 36 of the Taxes Management Act 1970 and paragraphs 34 to 36 of Schedule 18 to the Finance Act 1998. 

Equivalent assessment powers and time limits for indirect taxes are contained in the relevant tax-specific legislation, including the Value Added Tax Act 1994 and the Finance Act 1994. 

Current law on penalties for inaccuracies in tax returns and documents is contained in Schedule 24 to the Finance Act 2007. 

Proposed revisions 

Legislation will introduce a new general obligation to take corrective action and will: 

• introduce a new obligation for taxpayers to take corrective action where they become aware of an inaccuracy within a return or document covered by Schedule 24 of Finance Act 2007, either by correcting it or by notifying HMRC where a correction cannot be made directly 

• ensure that the requirement to take corrective action applies only where the taxpayer or HMRC remains within existing statutory time limits for amending returns or making assessments 

• amend section 118(6) Taxes Management Act 1970 and related provisions so that, where a taxpayer becomes aware of an inaccuracy and does not take reasonable steps to correct or notify HMRC, the inaccuracy is treated as deliberate for the purposes of penalties and assessment time limits 

Legislation will introduce a new customer correction notice and will: 

• introduce a new power enabling HMRC to issue a Customer Correction Notice requiring a taxpayer to respond, including by correcting an inaccuracy, making a disclosure, or confirming no correction is required 

• provide for inaccuracy penalties to only apply to deliberate errors where the taxpayer takes reasonable steps to secure a correction following receipt of their first Customer Correction Notice within a six-year period 

• provide for errors found later by HMRC upon scrutiny of a customer correction, or the absence of a correction, following a Customer Correction Notice to be presumed to be careless unless the inaccuracy is deliberate or the taxpayer can satisfy HMRC that they took reasonable care in the first instance

Summary of impacts 

Exchequer impact (£ million) 

2025 to 2026	2026 to 2027	2027 to 2028	2028 to 2029	2029 to 2030	2030 to 2031
Empty	Empty	Empty	Empty	Empty	Empty

The final costing will be subject to scrutiny by the Office for Budget Responsibility and will be set out at a future fiscal event. 

Macroeconomic impact 

This measure will be formally assessed once costings have been certified by the Office for Budget Responsibility but is not expected to have any significant macroeconomic impacts. 

Impact on individuals, households and families 

This measure will impact an unknown number of individuals by requiring them to take corrective action where they identify an inaccuracy in returns or documents. These individuals will now need to understand the new obligation and amend inaccuracies where possible or otherwise disclose them to HMRC. Individuals that receive a Customer Correction Notice will be expected to understand the required actions and respond appropriately. 

The measure is not expected to impact on family formation, stability or breakdown. 

The overall impact on individual’s experience of dealing with HMRC is expected to stay the same. The change makes explicit the expectation that taxpayers will ensure their tax documents are accurate and the policy intent is to make this a simple and smooth process for correcting inaccuracies.  

Equalities impacts 

HMRC does not currently hold data on the protected characteristics of individuals impacted by this measure and so cannot make an assessment of the equality impacts. 

Administrative impact on business including civil society organisations 

This measure is expected to have a negligible impact on an unknown number of businesses by requiring them to take corrective action where they identify an inaccuracy in returns or documents. This will be updated as data becomes available. Businesses will now need to understand the new obligation and amend inaccuracies where possible or otherwise disclose them to HMRC. Businesses that receive a Customer Correction Notice will be expected to understand the required actions and respond appropriately. 

One-off costs could include familiarisation with the changes and could include seeking advice on receipt of a notice.  

This measure is not expected to disproportionately impact civil society organisations. 

The overall impact on businesses’ experience of dealing with HMRC is expected to stay the same. The change makes explicit the expectation that taxpayers will ensure their tax documents are accurate and the policy intent is to make this a simple and smooth process for correcting inaccuracies.   

Operational impact (£ million) (HMRC or other) 

HMRC will need to make changes to IT systems at an estimated cost of £5 million. 

Other impacts 

Other impacts have been considered, and none have been identified. 

Monitoring and evaluation 

Consideration will be given to monitoring this measure through information collected from tax returns and documents and kept under review through HMRC’s compliance activity. 

Further advice 

If you have any questions about this change, contact the tax administration reform compliance team at tarcompliance@hmrc.gov.uk