Navigating tax disputes can be a complex and daunting process. This “need to know” series sheds light on the essential elements. In this note, we cover how to amend your tax return, HMRC’s powers to amend your tax return, and the risk of penalties.

How to amend your tax return

Within 12 months

If you realise you have made a mistake on your tax return you can amend it within 12 months of the normal filing deadline. This is 31 October for a paper return or 31 January for an online return. 

If the mistake results in an increase in tax, you will also need to pay accrued interest. If it lowers the tax, you can claim a refund. 

The process for amending your tax return depends on whether you filed it online or filed a paper return:

Online tax return: if you filed your tax return online, you can amend it by logging into your HMRC online account (you must wait three days after filing before updating your return).

Paper tax return: if you filed a paper tax return, you should download and complete a new tax return form for the relevant year. Clearly mark the form as an amendment and include the correct information. Send the amended return to the address provided by HMRC for paper returns.

After 12 months 

If you realise you made a mistake on your tax return and the 12-month deadline has already expired, you should contact HMRC in writing. 

HMRC guidance states that in your letter you must set out:

• the tax year you are correcting;
• why you think you have paid too much or too little tax;
• how much you think you have overpaid or underpaid; and
• your signature.

If you are making an overpayment relief claim, you should also include in your letter:

• that you are making a claim for overpayment relief;
• whether you have previously made an appeal for the same payment; and
• a signed declaration confirming that the details provided are “correct and complete to the best of your information and belief”.

You can make a claim for overpayment relief for up to four years from the end of the tax year the return relates to. 

HMRC’s powers to amend your tax return

HMRC has the authority to amend your tax return if they identify an error or discrepancy. This can occur during routine checks or if they receive information that contradicts your return. 

HMRC can make amendments within nine months of the date you filed your return. They will usually use this power to correct obvious errors or omissions, and they will notify you of any corrections they make. You may have to pay more tax plus any accrued interest, or you may be entitled to a refund.

If you disagree with HMRC's amendments, you have the right to reject them. You must give notice of your rejection within 30 days of the date the notice of correction was issued. 

If HMRC consider there may be less obvious errors in the return, they are likely to open an enquiry into the return. HMRC can open an enquiry within one year of the date the return or the amended return is filed. This option is also open to them if you have rejected a correction they have made to a return. 

At the end of their enquiry, HMRC will issue a closure notice explaining their conclusions and the amendments that they will make to the return. The closure notice can be appealed, and you can refer to our article on appealing a HMRC decision for more information on this.

If HMRC do not correct the return within nine months or open an enquiry, they cannot amend your return. However, HMRC have separate powers to issue an assessment for additional tax where the relevant conditions are met. 

Following a consultation that concluded on 22 January 2025, HMRC are further considering reforms to the use of their correction powers, and new powers to require taxpayers to self-correct their return.

Penalties

In addition to payment of the tax and interest, you may be charged a penalty if your return or other tax document was inaccurate and tax has been:

• unpaid;
• understated; or
• over-claimed.

For tax years ended 5 April 2009 and subsequent, the severity of the penalty depends on the nature of the error and whether disclosure of the error was “prompted” or “unprompted”.

• Careless errors: if HMRC determines that the error was due to carelessness, you may face a penalty of between 0% to 30% of the additional tax due.
• Deliberate errors: if the error was deliberate but not concealed, the penalty will be between 20% and 70% of the additional tax due. 
• Deliberate and concealed errors: if the error was both deliberate and concealed, the penalty will be between 30% and 100% of the additional tax due.

An “unprompted” disclosure is where the error is notified to HMRC before you have any reason to believe they are going to discover it. Otherwise, the disclosure will be “prompted” and there will be a higher minimum to the ranges set out above.  

There is also a reduction available to the penalty percentage based on the quality of the disclosure that is made. This depends on the timing, nature, and extent of the disclosure, and it is not limited to “unprompted” disclosures (although they are likely to receive less of a reduction). 

Different percentages now apply to “offshore” matters, and for the most serious matters there can be an amount of up to 200% of the tax.

To avoid penalties, it is crucial to ensure that your tax return is accurate and complete. 

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For expert advice on handling tax disputes, reach out to a Macfarlanes representative today. Visit our Tax Investigations and Disputes page for in-depth information, and bookmark our Need to know: tax disputes hub for ongoing insights and updates.