Landlords could be penalised for mistakes on their tax returns under new legislation, it has emerged.
Under the Finance Bill 2027, set to come into effect in April next year, HMRC is given powers to issue new penalties for innocent errors in tax reporting if they are not corrected, the Daily Telegraph reports.
Tax declaration
HMRC could issue a Customer Correction Notice requiring the property owner to check their tax declaration and make changes if necessary.
If the landlord fails to comply, then HMRC could treat that error as deliberate and issue a penalty.
A taxpayer may make an innocent mistake because they don’t understand the rules.”
Nimesh Shah, Chief Executive at accountancy firm Blick Rothenberg, says: “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.
“A taxpayer may make an innocent mistake because they don’t understand the rules.”
Severe penalty
Helen Buchanan, Partner at law firm Freshfields, says: “The consequences of a deliberate penalty can be severe, both financially and reputationally.”
An HMRC spokesperson said: “We know most of our customers act in good faith and want to get their tax right.
“These proposals are designed to help minimise penalties for those who swiftly correct mistakes when we flag them and make the process of doing so quicker and easier.”
Unpaid tax
Landlords paid more than £100million in unpaid tax to HMRC last year, with the average more than £9,000, it was revealed last week.
A total of £104.3million was recovered from 11,511 property owners in 2025 to 2026, the highest in seven years, after ‘nudge letters’ were issued by the tax agency.
It is the third year in a row the final figure has risen above £100million, and is nearly three times the amount paid in 2019 to 2020.