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

Landlords Face New HMRC Penalties for Tax Reporting Errors

Landlords could be penalised for mistakes on their tax returns under new legislation, according to a report by The Negotiator. The Finance Bill 2027, due to take effect in April next year, will give HMRC new powers to issue penalties for innocent errors in tax reporting if they are not corrected.

Under the proposed changes, HMRC will be able to issue a Customer Correction Notice to property owners, requiring them to review and amend their tax declarations if necessary. If a landlord fails to comply with this notice, HMRC may treat the error as deliberate and impose a penalty.

Nimesh Shah, Chief Executive at accountancy firm Blick Rothenberg, noted that most people are not represented by a tax adviser and may not realise when they have made an error, potentially exposing them to higher penalties. Helen Buchanan, Partner at law firm Freshfields, stated that the consequences of a deliberate penalty can be severe, both financially and reputationally.

An HMRC spokesperson said the proposals are intended to minimise penalties for those who promptly correct mistakes when notified, and to make the correction process quicker and easier.

Recent figures show that landlords paid more than £100 million in unpaid tax to HMRC last year, with the average payment exceeding £9,000. In total, £104.3 million was recovered from 11,511 property owners in 2025 to 2026, the highest amount in seven years, following the issuance of ‘nudge letters’ by HMRC. This marks the third consecutive year that the total has exceeded £100 million, nearly three times the amount paid in 2019 to 2020.

These developments are particularly relevant for UK letting agents and inventory clerks, who may need to advise clients on the importance of accurate tax reporting and compliance with HMRC requirements.