Tax-return errors: landlords get a new chance to influence the proposed rules

9:53 AM, 19th September 2026, 3 hours ago

A new House of Lords inquiry gives landlords and their advisers an opportunity to explain what a workable tax-correction process should look like. Written evidence is invited by 5pm BST on 11 October 2026.

Reliable rental accounts depend on more than keeping receipts. Landlords also need a clear way to reconcile figures, investigate discrepancies and agree with their accountant who will put matters right. That practical experience could now help shape proposed changes to the way tax-return errors are handled.

The House of Lords Finance Bill Sub-Committee opened an inquiry on 18 September into parts of the Draft Finance Bill 2026–27, including HMRC’s proposals for modernising the correction of errors. It wants to hear from taxpayers, advisers and other interested parties. For landlords, the useful contribution is evidence about how the process would operate in a real property business.

A fresh opportunity to contribute

HMRC published the draft provisions and supporting material on 13 July 2026, with technical consultation responses due by 7 September. The parliamentary inquiry is a separate opportunity to contribute, with its own October deadline. The Sub-Committee’s remit covers tax administration, clarification and simplification, rather than tax rates.

These remain proposals. HMRC’s impact note specifies a future appointed day for the measure to take effect. The inquiry’s launch has not brought a new penalty regime into force.

What HMRC is proposing

The package would introduce an explicit obligation to act on relevant inaccuracies once a taxpayer becomes aware of them. HMRC says the obligation would apply where correction remains possible within statutory amendment or assessment time limits. Failure to take reasonable corrective steps could result in an inaccuracy being treated as deliberate, with consequences for penalties and assessment time limits. That does not make every mistake deliberate or create unlimited powers to reopen old returns.

The draft legislation would also allow HMRC to issue a correction notice where it has reason to suspect a relevant, still-correctable inaccuracy. The notice must identify the suspected error or type of error and set a deadline. The taxpayer could correct it, notify HMRC where direct correction is unavailable, or explain why the return is accurate. A correction notice is therefore distinct from a tax assessment: suspicion is not itself a determination that extra tax is due.

The draft includes conditional protection from careless-inaccuracy penalties, subject to a six-year notice-history test and timely corrective steps. Failure to comply with a notice could trigger a presumption of carelessness, unless the error is deliberate or the taxpayer establishes reasonable care. These distinctions make the wording and operation of the safeguards worth examining.

Where landlords’ experience could help

A practical submission could describe the documents needed to resolve a discrepancy and the obstacles encountered when obtaining them. Consider an illustrative case in which a letting agent’s annual statement differs from the landlord’s bank receipts. The difference might require reconciliation of fees, payment dates or money still held by the agent before anyone can establish whether the return needs changing.

The following are suggested issues landlords and accountants could raise, rather than a reproduction of the committee’s questions:

• Clear notices. What information would let the recipient identify the property, tax year and transaction concerned? Explain why a broad reference to rental income might leave an accountant unsure which records to investigate.
• Realistic response periods. How long can it take to retrieve statements from a former letting agent or accountant? Give an actual timescale where possible and explain when an extension process would be useful.
• Reasonable corrective steps. What should happen when a landlord promptly instructs an accountant but supporting records remain outstanding? Suggest how requests, progress updates and the eventual response could be documented without leaving responsibility unclear.
• Disagreement and safeguards. How should HMRC handle a supported explanation that the return is correct? Contributors could suggest clear acknowledgement, reasons for rejecting an explanation and an understandable route for resolving the disagreement.

These are proposals for making the process workable, not assurances that each safeguard already appears in the draft. Useful evidence would connect a specific problem to a practical improvement and explain its likely effect on time, cost or accuracy.

Build a clear record with your accountant

Whatever happens to the legislation, landlords can make discrepancies easier to resolve by keeping rent schedules, agents’ statements, bank records and invoices in a consistent form. When a difference appears, record what has been identified, which tax year it concerns, who is investigating and when the next response is due.

Keep estimates and forecasts clearly distinguished from the figures used in a filed return. Property118’s case study examining a property portfolio’s underlying performance illustrates how conclusions depend on the figures and assumptions being used. A working estimate for business planning needs a different treatment from a confirmed amount in the accounts.

If an existing return may be wrong, raise it with your usual tax adviser promptly. HMRC’s current Self Assessment guidance explains how returns can be amended and when taxpayers need to write to HMRC. The parliamentary inquiry is a channel for policy evidence; it does not replace dealing with an individual tax position.

How to contribute

Start with the Draft Finance Bill inquiry page and follow its link to the call for evidence. Read the current questions, submission instructions and privacy information before sending anything. The published deadline is 5pm BST on Sunday 11 October 2026.

A concise account of a problem, the work needed to resolve it and a suggested improvement would give the committee something concrete to consider. Use examples that avoid identifying tenants or disclosing tax references and private financial records. Landlords and accountants can contribute most usefully by showing what a clear, fair correction process needs to achieve in practice.