HMRC will be able to brand unintentional tax errors as "deliberate", expose them to fines of up to 100 per cent and reach back 20 years, under measures slipped into the Finance Bill after John Healey's Autumn Budget. The so-called Budget Resolutions survived their first reading on 3 November. Not one of them was announced from the despatch box.

The enforcement push is not accidental. HMRC estimates the tax gap — the difference between tax owed and tax collected — cost the Treasury nearly £60bn in the 2024/25 financial year. Labour's manifesto bars hikes to income tax, VAT and employee national insurance, so the Treasury is leaning on compliance instead. Healey said restoring fiscal discipline was his "first commitment as Chancellor", including "raising revenue from those who can afford to pay". The pledge is easy to make; who counts as able to pay is where the argument begins.

What does the 'Duty to Correct' change for taxpayers?

From April 2028, a statutory Duty to Correct regime will legally require taxpayers to fix mistakes on old returns the moment they become aware of them. Today, a post-filing error is treated as "careless" — the lower penalty tier, at up to 30 per cent of unpaid tax over six years. Under the new regime, even an unintentional inaccuracy can be branded "deliberate", the term HMRC uses when it believes it was intentionally fed false figures or withheld information.

That is the highest penalty tier: fines of up to 100 per cent and a 20-year scrutiny window. Tax barristers have flagged two problems the government has not addressed:

• There is no minimum threshold on the size of an error.
• The 20-year window clashes with statutory record-keeping rules. The self-employed must keep records for only five to six years, so taxpayers facing a two-decade audit may simply lack the receipts.

Fiona Fernie, partner at Blick Rothenberg, said: "This legislation needs clearer safeguards and a finite time limit for making corrections. Otherwise, a measure intended to modernise compliance could undermine it." An HMRC spokesperson responded: "They won't be penalised for innocent mistakes, and deliberate penalty charges only arise where taxpayers fail to take reasonable steps to correct an inaccuracy they were already aware of." The word "reasonable", notably, is left undefined.

How far can HMRC go after a death?

Currently HMRC can demand information from a deceased taxpayer's family for up to four years after death, covering inheritance tax, capital gains tax and income tax. The new proposals remove that limit: unlimited information demands, and evidence-gathering powers reaching back 20 years in existing investigations.

Draft legislation requires HMRC to apply to a tax tribunal before issuing a demand more than four years after death — but it need not inform the executors or the family until after the tribunal has ruled. Advisers warn this could trigger disputes among relatives or leave families with tax bills they cannot pay, years after an estate is settled.

A government spokesperson said: "This does not mean new powers and will not affect the vast majority of taxpayers." The statement sits uneasily with the removal of a four-year statutory limit.

Will HMRC read your AI chat history?

The bill expands the definition of digital "records" HMRC can request to "relevant" digital records — which may include AI chatbot conversations. It also obliges third parties, including software providers, to hand over taxpayers' information.

Praveen Gupta, head of tax at Azets, said: "Conversations between a taxpayer and their advisor are confidential and AI conversations should be treated in the same way, so without the right checks and balances HMRC's new powers could cross the line between a legitimate investigation and overreach." He asked whether individuals would get access to HMRC's own internal notes: "In the interests of fairness, they should be."

Matthew Greene, partner at Stewarts, said access to chat histories "could help uncover tax irregularities" but "also risks dragging innocent taxpayers into unnecessary investigations". People may explore hypothetical tax arrangements with AI without acting on them, he noted. HMRC countered: "It is not about going through everyone's use of large language models. We can only request information where we already have a lawful basis to do so."

Two quieter changes

HMRC appears to have reversed its acceptance of electronic signatures on 64-8 agent authorisation forms, allowed since 2021, without publishing guidance. Joseph Adunse, tax partner at Moore Kingston Smith, said HMRC is "insisting on originals signed in ink", adding cost and delay for clients abroad.

Whistleblowers also face a change: under the Strengthened Reward Scheme (rewards of 15–30 per cent of tax collected where tips yield at least £1.5m), HMRC will deduct 45 per cent income tax at source from March 2027. Informants will receive 55 per cent upfront; the tax owed is unchanged.