Editor's note: This brief was summarised by The Property AI Newsroom from a report by PropertyWire. Read the original article for full details.

HMRC to Gain New Powers to Penalise Landlord Tax Errors from April 2027

Landlords will face new penalties for uncorrected tax reporting errors under legislation set to take effect in April 2027. The Finance Bill 2027 will grant HMRC powers to issue Customer Correction Notices, requiring property owners to review and amend their tax declarations if mistakes are found.

The new legislation allows HMRC to treat uncorrected errors as deliberate, which could trigger financial penalties. These measures are intended to place greater responsibility on landlords to identify and rectify their own tax errors.

Nimesh Shah, Chief Executive at accountancy firm Blick Rothenberg, highlighted concerns for landlords who do not have professional tax advice. Shah noted that many taxpayers may not realise when they have made an error and could be exposed to higher penalties as a result. Helen Buchanan, Partner at law firm Freshfields, commented on the potential severity of deliberate penalties, stating that the consequences can be both financially and reputationally significant.

An HMRC spokesperson stated that the proposals are designed to help minimise penalties for those who quickly correct mistakes when notified, and to make the correction process faster and easier.

The introduction of these powers comes 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 is the highest recovery figure in seven years and marks the third consecutive year that collections have exceeded £100 million. The 2025 to 2026 total is nearly three times the amount recovered in 2019 to 2020, following HMRC’s use of ‘nudge letters’ to prompt voluntary compliance.

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. Letting agents and inventory clerks may wish to alert their landlord clients to these upcoming changes and the importance of accurate tax reporting.