HM Revenue and Customs (HMRC) is considering new powers to impose fines on taxpayers who make unintentional errors on their self-assessment tax returns, according to recently proposed legislation. The changes would particularly affect self-employed individuals and landlords, allowing HMRC to levy penalties not only for deliberate inaccuracies but also for “careless errors” that go uncorrected.

Currently, HMRC typically treats an error as deliberate only when a taxpayer knowingly submits false information. Under the proposed rules, however, penalties could be applied if taxpayers fail to amend careless mistakes once they become aware of them. The scale of penalties would vary depending on whether an error is classified as careless or deliberate. For careless errors, the penalty could range from 0 to 30 percent of the tax lost, while deliberate errors could attract penalties up to 100 percent.

HMRC argues the revised system would enhance compliance and streamline the agency’s enforcement efforts, allowing it to allocate more resources toward tackling complex tax avoidance cases. A spokesperson for HMRC stated the proposals are intended to reduce penalties for those who promptly correct errors when they are identified and to make the correction process simpler and faster.

However, tax professionals have raised concerns regarding the potential impact on taxpayers. Nimesh Shah, a partner at Blick Rothenberg, noted that many taxpayers are not represented by advisers and might unknowingly submit inaccurate returns, exposing themselves to higher penalties. He highlighted the increasing complexity of the tax system as a contributing factor, saying taxpayers could make innocent mistakes due to misunderstandings of the rules.

Helen Buchanan, a tax specialist at law firm Freshfields, warned that the changes could pose significant challenges for large companies. She emphasized the severity of deliberate penalties, both financially and in terms of reputation, which could have serious consequences for corporate taxpayers.

The proposed legislation would also obligate taxpayers to correct any errors once they become aware of them, though experts caution that determining when a taxpayer gains such awareness may prove difficult for HMRC.

The developments follow a high-profile case involving Angela Rayner, recently reinstated as Housing Secretary, who was found to have underpaid stamp duty on her flat in Hove due to complicated trust arrangements for her disabled son.

HMRC has opened a technical consultation on the proposals, which runs until September 7. No definitive date has been set for the introduction of the new rules.