For anyone grappling with their Tax Returns before the 31 January filing deadline, scattered around the form and on some of the supporting pages are innocuous looking “white space” boxes. But what are they actually for?
Officially, the white space areas of the form are there to add additional information or explanation in support of your Tax Return or to provide reasons behind any decisions that you have taken which may be at odds to the Inspector’s interpretation of the tax legislation. Additionally, it can be used to ensure that the Inspector is notified of an issue and to link various parts of the form and schedules together.
The Self-Assessment Tax Return is initially scanned and read by computer, especially if filed online. The computer tends to not to look at additional pages of notes or breakdowns of information but using a phrase similar to “For further information, please refer to the supporting schedules which form part of this Return” will lead the Inspector to look at those schedules before asking a question. So, if HMRC want to check that you have included the interest from a particular account, they can see this information had been declared from the outset.
Another useful phrase to use is when you make sundry capital disposals that do not need to be formally declared because they are below the declaration thresholds. In this case the phrase “During 2019/20, I made sundry capital disposals of less than £48,000 proceeds and less than £12,000 gains” (2019/20 figures for the personal Tax Return) would explain to the Inspector what the sundry receipt from the auction house would be without HMRC having to ask. Similarly, the receipt of inheritances, gifts or non-taxable income can be included within the white space areas to explain sudden changes to your financial affairs.
Including something in the white space section of a Tax Return, however, is not a guarantee that HMRC will accept that you have undertaken complete disclosure of an issue. There have been cases where taxpayers have tried to hide dubious claims or information amongst a large amount of unrelated information and subsequently tried to rely on the 12-month discovery time period to claim that HMRC had been told and had not acted on the information supplied. These claims were thrown out of court and HMRC allowed to make a discovery assessment outside of the 12-month limit. For complete disclosure, you should ideally also include a separate letter to HMRC to clearly highlight the potentially contentious information, decision or claim that you wish to disclose as well.
By and large, however, the use of the white space on the Tax Return helps reduce the number of simple and purely administrative checks that you will receive as well as demonstrating to HMRC that you are taking care of your affairs to the best of your ability
For more information on anything mentioned above, contact Robin Beadle.
