Landlords face new penalties for uncorrected tax reporting errors under legislation set to take effect in April 2027, according to provisions in the Finance Bill 2027.
The legislation grants HMRC powers to issue Customer Correction Notices requiring property owners to review their tax declarations and amend any mistakes. Failure to comply could result in the tax authority treating errors as deliberate, triggering financial penalties.
Impact on unrepresented landlords
Nimesh Shah, Chief Executive at accountancy firm Blick Rothenberg, highlighted concerns for landlords without professional tax advice. “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 said. “A taxpayer may make an innocent mistake because they don’t understand the rules.”
Helen Buchanan, Partner at law firm Freshfields, noted the potential severity of the consequences. “The consequences of a deliberate penalty can be severe, both financially and reputationally,” she said.
An HMRC spokesperson stated: “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.”
Rising tax recovery figures
The new measures come as HMRC recovered £104.3 million in unpaid tax from 11,511 property owners in 2025 to 2026, averaging more than £9,000 per landlord. This represents the highest recovery figure in seven years and marks the third consecutive year collections have exceeded £100 million.
The 2025 to 2026 total is nearly three times the amount recovered in 2019 to 2020, following the tax authority’s use of ‘nudge letters’ to prompt voluntary compliance. The rising recovery figures come amid increased administrative complexity in the property sector, which has seen market conditions fluctuate in recent years.
Market implications
The introduction of Customer Correction Notices represents a shift in HMRC’s enforcement approach, placing greater responsibility on landlords to identify and rectify their own tax errors. Property investors and buy-to-let landlords will need to ensure accurate reporting or seek professional tax advice to avoid potential penalties under the new regime.
The Finance Bill 2027 provisions are scheduled to come into force in April 2027, giving landlords approximately one year to review their tax compliance procedures.
