When should you use the tax return white space?
The deadline for submitting personal self-assessment tax returns on paper was 31 October. However you can still submit them online by 31 January – failure to do so will result in a £100 penalty.
But what should you do if you or your accountant can’t decide what to declare for a particular transaction because it was complex or might be open to a different interpretation by HMRC?
Use the white space
The law states you must provide any additional information you think HMRC will need to check your tax bill. This is where you should make use of the so-called tax return white space. Whether you’re using HMRC’s system or other software to complete your return, you’ll be asked if you want to supply any extra information, and anything you enter will go into the white space.
In most cases, if you don’t use the white space to explain a questionable tax return entry it won’t cause you any trouble, however if HMRC decide to question your tax return and they think you’ve not supplied the information you should have, the result might be a penalty charge or a greater penalty, if it turns out you made a mistake.
Don’t get caught in the Trap.
Not many people are aware that failing to provide the correct additional information means HMRC has much longer in which to challenge your tax return. If HMRC can show you left off information because you were careless, it will have six years in which to issue an assessment to collect extra tax due, and if it can show you did it deliberately, it will have 20 years.
Do I need to use the white space?
There following situations are where we think you should always use the white space:
- To back up a complicated entry on a tax return, for example, a capital gains tax calculation on the sale of your home where you have used part of it for business.
- Where you aren’t sure of a figure; for example, where the tax rules require you to make a judgement, say, on the amount of a business expense to claim.
- Where you know the entry you’ve made differs from what HMRC would expect. For example, where you’ve claimed tax relief which HMRC’s guidance says you aren’t entitled to.
Points to note
1.HMRC’s policy is not to look at the white space unless a question is raised about one of the entries on your tax return. So you are wiser to include any additional information you feel maybe relevant.
2. Don’t forget that you are responsible for the entries on your tax return even where your accountant completes it for you. So don’t just check the figures – make sure a white space entry is included if appropriate.