Landlords filing self-assessment returns could find an ordinary mistake becoming an expensive one under draft HMRC rules that would tighten the duty to correct tax errors.
The key change comes after filing and once a taxpayer becomes aware that information supplied to HMRC is inaccurate, they would have to correct it or notify the tax authority.
The Daily Telegraph reveals that failing to take reasonable steps to correct the mistake could result in an inaccuracy being considered as deliberate for penalty purposes.
That includes where it was not deliberate when the return was originally submitted.
Penalties for careless errors can range from 0% to 30% of the unpaid tax, while penalties for deliberate inaccuracies can reach 100%.
Landlord tax mistakes
Nimesh Shah of Blick Rothenberg, an accountancy firm, told the newspaper: "Most people are not represented by a tax adviser – and so taxpayers may genuinely not know when they have made an error and could find themselves exposed to higher penalties."
He also warned that changes to the tax system had made the rules increasingly complicated, raising the risk of taxpayers submitting inaccurate returns.
Mr Shah added: "A taxpayer may make an innocent mistake because they don’t understand the rules.
"My concern here is that HMRC could apply hindsight to assess the taxpayer behaviour."
HMRC disclosure or explanation
The consultation documentation highlights that HMRC would be allowed to send a Customer Correction Notice so a taxpayer can either correct an error, make a disclosure or explain why no correction is required.
Where someone receives their first HMRX tax notice within a six-year period and then corrects the careless mistake, there will be no penalty, but failing to comply could see HMRC treating that as a deliberate error and then making assessments that go back 20 years.
The consultation closes on 7 September, and there’s no implementation date set for the new rules.
The proposals also follow Angela Rayner's return as Housing Secretary after she settled a £40,000 stamp duty underpayment arising from her disabled son’s complex trust arrangements and she was cleared of deliberately avoiding tax.
Landlord tax recoveries
The plans come shortly after figures showed HMRC recovered £104.3 million in unpaid landlord tax during 2025/26, the third year running that the total had exceeded £100 million.
Landlords made 11,511 voluntary disclosures during the year, according to data obtained by accountancy firm Price Bailey and reported by Accommodation for Students last week, the highest number since 2018/19.
The average payment fell to £9,063, compared with a record £13,713 in the previous year.
The figures include tax recovered from voluntary disclosures under the Let Property Campaign as well as compliance action involving people who did not respond to HMRC and discovery assessments.
Getting landlord tax right
Simon Thompson, the managing director of Accommodation for Students, said: "For landlords, the proposals from HMRC make post-submission checks almost as important as getting a return right first time.
"A genuine oversight could become far more serious if it is later identified but not dealt with promptly."
He added: "All landlords will be aware that they must keep clear records, review their tax filings carefully and act quickly when discrepancies emerge, and this will therefore matter more.
"The private rented sector should also take note of the fact that HMRC would gain stronger powers to pursue older liabilities where requests for correction are ignored.
