HMRC plans a legal duty to correct tax errors

HMRC plans to create a legal duty for taxpayers to take reasonable steps to correct errors in their tax returns once they become aware of them, either by amending the return or by telling HMRC. HMRC would also gain the power to issue a correction notice, requiring a taxpayer to correct an error or explain why no correction is needed.

Who it covers

The duty would apply to businesses and individuals across most taxes, including income tax, corporation tax, VAT, inheritance tax and stamp duty land tax.

The penalty risk

If a taxpayer knows about an error and fails to correct it, that would be treated as deliberate behaviour, even if the original mistake was innocent. Deliberate behaviour carries the highest penalties and lets HMRC look back up to 20 years.

Where it stands

Draft legislation was published for consultation over the summer. The outcome is awaited and no start date has been set. The proposals do not yet define what counts as being "aware" of an error.

Analysis: what it means for your clinic

This applies to every UK business, but clinics have particular grey areas, VAT above all. Aesthetic treatments are generally standard-rated, while medical care by registered health professionals can be exempt, and the line between the two is not always clear. If you have ever wondered whether a past return was right, the time to check with your accountant is before this becomes law, not after. This is not tax advice.

Source: Stephenson Harwood (October 2026).