HMRC could investigate households' tax returns dating back to 2007 under proposed rule changes, meaning taxpayers who believe their old affairs are settled may need to think again. Small errors from the mid-to-late 2000s could come back to haunt them, according to a new consultation.
What the Consultation Proposes
HMRC has launched a consultation titled Modernising the Correction of Errors, which includes a proposal requiring taxpayers who become aware of inaccuracies in tax returns or other submitted documents to correct them. The consultation ends in September 2026, and if rules change, they would likely take effect in 2027.
The proposed rules would alter time limits for HMRC assessments. Currently, time limits are four years where reasonable care was taken, six years where behaviour was careless, and up to 20 years where an error was deliberate. The consultation introduces new requirements to correct inaccuracies in returns or documents provided to HMRC, making the obligation on taxpayers to take action explicit once errors are identified.
New Powers for HMRC
The plan 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. This could affect anyone who has filed a tax return in the past two decades.
Fiona Fernie, a partner at leading audit, tax and business advisory firm Blick Rothenberg, has led warnings over the plan. She said: "Under the new proposals taxpayers who discover errors while reviewing old documents or returns up to 20 years old will undoubtedly clash with HMRC if they disagree about whether corrections were required."
Why HMRC Says It's Needed
HMRC states 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." The tax authority says it seeks to achieve this by establishing clear expectations and providing incentives through the penalty system.
Responses to the technical consultation are due by 7 September 2026. To get in touch with HMRC, taxpayers can email the address listed in the consultation document. The changes could have significant implications for individuals and businesses who have filed tax returns over the past 20 years, potentially requiring them to revisit historical documents.
Impact on Taxpayers
If the rules are implemented, taxpayers who discover errors in old returns would be legally obliged to correct them, even if the errors were made years ago. This could lead to increased compliance costs and potential penalties for those who fail to act. The move is part of a broader effort by HMRC to modernise its processes and reduce the tax gap, but critics warn it could place an undue burden on taxpayers.
