Landlords are set to face new penalties for uncorrected tax reporting errors under legislation scheduled to take effect in April 2027, according to provisions in the Finance Bill 2027.
The new legislation will grant HMRC powers to issue Customer Correction Notices, which will require property owners to review their tax declarations and amend any mistakes. Failure to comply could lead to the tax authority treating errors as deliberate, potentially triggering financial penalties.
Nimesh Shah, Chief Executive at Blick Rothenberg, expressed concerns for landlords without professional tax advice, stating that taxpayers may not know when they have made an error and could face higher penalties. Helen Buchanan, Partner at Freshfields, noted that the consequences of a deliberate penalty can be severe, both financially and reputationally.
An HMRC spokesperson stated that the proposals are designed to help minimise penalties for those who swiftly correct mistakes and make the process quicker and easier. The new measures follow HMRC recovering £104.3 million in unpaid tax from 11,511 property owners in 2025 to 2026, averaging over £9,000 per landlord. This marks the highest recovery figure in seven years and the third consecutive year collections have exceeded £100 million.
The introduction of Customer Correction Notices represents a shift in HMRC’s enforcement approach, placing greater responsibility on landlords to identify and rectify their own tax errors.