Why Honest Mistakes Are the Real Risk
HMRC puts the UK tax gap (the difference between tax owed and tax collected) at £59.2bn for 2024-25, with small businesses responsible for 62%. Evasion is only 12%, while failure to take reasonable care accounts for 35% and plain errors 16%. [Editor Note: Unverified figure - check against HMRC guidance]
That's why the Budget proposes a "duty to correct". Once you know about an inaccuracy in your return, you would have to fix it, or it would be treated as deliberate for penalty purposes. HMRC can currently go back 4 years for an error made despite reasonable care, 6 years for a careless one and up to 20 years for a deliberate one. [Editor Note: Unverified figure - check against HMRC guidance]
Customer Correction Notices
HMRC could also send a Customer Correction Notice asking you to check your figures and either correct them or explain why no change is needed. If it's your first notice in 6 years and you take reasonable steps to put things right, you won't be penalised unless the error was deliberate.
None of this is law yet. It's expected in the 2026-27 Finance Bill, and because correcting an old return can mean extra tax, our guide to budgeting for your Self Assessment tax bill can help you plan.
