The HMRC stealth powers to take your taxes

The UK's tax authority, HMRC, is set to receive enhanced powers to collect taxes. These new measures, introduced after Chancellor John Healey's Autumn Budget, include the ability to seize money from bereaved families, investigate AI chatbot conversations, and impose substantial fines on those who make inadvertent errors on tax documents.

The Finance Bill, known as 'Budget Resolutions,' has been quietly passed and will come into effect in April 2028. The reforms are part of HMRC's efforts to close the UK's significant tax gap, which amounted to nearly £60 billion in lost tax receipts in the 2024/25 financial year. While some resolutions introduce tax hikes, others significantly expand HMRC's powers.

Under the new 'Duty to Correct' regime, taxpayers will be legally required to correct mistakes on previous tax returns once they become aware of them. This change could impose a 100% fine and a 20-year scrutiny period, even for unintentional errors, raising concerns among tax professionals about the lack of a minimum threshold for tax errors and the 20-year window, which exceeds the statutory record-keeping period for the self-employed.

Labour's manifesto prevents increases in income tax, VAT, and employee national insurance, so the government is relying on HMRC to raise revenue through compliance and stricter enforcement. However, bereaved families may face extended scrutiny as HMRC will be allowed to request information from their families for an unlimited period, and the authority can investigate tax matters that go back up to 20 years. This could result in disputes among relatives and financial hardship for grieving families.