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Budget 2026: HMRC goes ahead with ‘careless’ correction notices
HMRC set to gain powers to challenge suspected errors, with tougher consequences for taxpayers who fail to act on known mistakes with risk of ‘careless error’ presumption.
Budget documents confirm that taxpayers who discover mistakes and fail to disclose them could be treated as having acted deliberately, while those who ignore correction notices from HMRC will face a presumption that any resulting errors were careless.
The HMRC policy paper on correction notices published alongside Budget 2026 confirms the legislation will take effect from 1 April 2028, with some of the most significant changes aimed at taxpayers who fail to disclose known errors.
The paper stated: ‘Legislation will provide for errors found later by HMRC upon scrutiny of a response (or lack of response) to 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.’
The changes seemingly make it more difficult for taxpayers to argue that an error was a mistake if they fail to engage with a customer correction notice from HMRC.
The paper also sets out 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 also introduce ‘a new obligation for taxpayers to take corrective action where they become aware of an inaccuracy within a return or…either by correcting it or by notifying HMRC where a correction cannot be made directly’.
HMRC will also be allowed to ‘issue a customer correction notice where it has reason to suspect an inaccuracy in a document and require the taxpayer to respond, including by correcting the inaccuracy, making a disclosure, or confirming no correction is required’.
The paper clarified that penalties may be removed when ‘a taxpayer makes an unprompted disclosure or takes reasonable steps to secure a correction following receipt of their first customer correction notice within a six year period’.
On how the measure will affect individuals, the paper states it will require them to 'take corrective action where they identify an inaccuracy in returns or documents’.
It continued: ‘Individuals that discover inaccuracies will 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 paper stated.
On the impact of businesses, the paper stated: ‘This measure is expected to have a negligible impact on businesses by requiring them to take corrective action where they identify an inaccuracy in returns or documents.’
HMRC believes that the overall impact on individual’s and businesses’ experience of dealing with HMRC was ‘expected to stay the same’ after the measures come into place.
The HMRC policy paper includes an empty impact on revenues raised through the changes, stating: ‘The final costing will be subject to scrutiny by the Office for Budget Responsibility (OBR) and will be set out at a future fiscal event.’
The reforms were first announced at Budget 2024 and subsequently included in HMRC's transformation roadmap, with draft legislation published for consultation in 2026.
For full Budget coverage, go to Budget 2026 at a glance
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