Draft Finance Bill 2026-27: Inquiry – LITRG response
The Low Incomes Tax Reform Group (LITRG) has responded to the call for evidence published by the Finance Bill Sub-Committee on the draft Finance Bill 2026-27. Our response focuses on the questions concerning the modernisation of the correction of errors and a proposed offence for reckless untrue statements. A LITRG representative also gave oral evidence to the Sub-Committee in respect of its inquiry.
There are two elements to the measure Modernising the correction of errors. For them to operate effectively, HMRC will need to undertake a significant programme of awareness-raising. They will also need to ensure they provide clear, accessible guidance and clear processes in place to support taxpayers. This should cover not only the practicalities of taking corrective action in different situations, but also the more complex areas that will require judgement, such as the behaviour when the original error was made.
There are a number of areas that require judgement under the general obligation to take corrective action. These will make it extremely difficult for unrepresented taxpayers to understand their obligations and how to meet them.
In respect of the proposed criminal offence for making reckless untrue statements or declarations in direct taxes, we are not convinced that the case has been made for its creation. We think it has the potential to create anxiety among unrepresented taxpayers and could cause some to disengage with the tax system.
We believe that the most effective way of improving taxpayer compliance generally involves making it easier for taxpayers to comply, using nudges and prompts to improve taxpayer awareness and understanding, acting in a timely manner and following the Charter standards.
You can read LITRG’s full submission using the link provided. A link is also given to the original call for evidence on the website of the UK Parliament.