The recent case of Colin Moore v HMRC FTC/82/2010 is rather alarming and represents a clear warning to anybody enclosing information with their tax return. Mr Moore submitted his tax return for 2003/4 and included in his tax return some details of his bank interest. He thought (wrongly) that he could deduct losses from his bank interest and included the net figure in his tax return. However he enclosed all the relevant details and his calculations on separate sheets submitted with his tax return. It was accepted that the information he provided was sufficient for HMRC to calculate his tax liability accurately. However, HMRC claimed he had been negligent and the Upper Tribunal agreed. They said that the entries in the boxes on his tax returns were the things which were important and setting out all the relevant information (no matter how comprehensive) in an additional sheet did not help him.

That sounds a bit worrying but the reasoning is worse. The reason why he was negligent is because he did not follow the guidance published by HMRC or complete the relevant working sheets which had been enclosed with the return. Although these sheets have no statutory force, it seems that if you fail to adhere to them, you will be negligent. To be penalised by HMRC simply for not following their non-statutory guidance seems to be going a bit far – but that would appear to be the position.

This case specifically deals with the guidance notes enclosed with the tax return – but the argument is surely no better (or worse) where other guidance has been issued by HMRC, perhaps on their website or in their manuals.

I wonder what the position would have been had Mr Moore had included all the relevant details in the white space within the tax return. Maybe his “self-assessment” would still have been incorrect and therefore negligent but maybe completing the white space within the return would have protected him.