Mystery Shopping Thread 20 **PLEASE DO NOT MENTION CLIENT NAMES OR FEES ON HERE**

dazza.mk

Lil_Me wrote: »

They key tax loophole is the idea of the reimbursement side of the money is an "incidental benefit". I.e you did the job to get the fee, and if the job notes require you to eat a meal then this is purely an incidental benefit to getting the fee. This is the argument that most will use should the tax man question you so this means that you class the reimbursement as an income, and the purchase as an expense. Normally these cancel each other out, so then you're left with the fee minus the travel/printing costs and you are liable to pay tax on the profit left over.

E.g Job pays £5, you have to buy something for £10. 2 miles travelled and 10 pages printed.
Income is the fee and the reimbursement = £15
Expenses is the purchase, travel and printing = £11.50
Profit = £3.50

Now reimbursement only jobs you'd have a very hard time to justify why you did the job other than to get "free stuff". Therefore the purchase is not an incidental benefit, the reimbursement is the ONLY reason you did the job.

Agreed, HappyMJ - how would you justify the pub food as an incidental benefit and therefore tax deductible? (as I don't think HMRC would consider it an incidental benefit to generating a tax loss)

em1979

Does anyone with a psychic account know if GAP money will be in tomorrow?

Boredupnorth

Lil_Me wrote: »

The key tax loophole is the idea of the reimbursement side of the money is an "incidental benefit". I.e you did the job to get the fee, and if the job notes require you to eat a meal then this is purely an incidental benefit to getting the fee. This is the argument that most will use should the tax man question you so this means that you class the reimbursement as an income, and the purchase as an expense. Normally these cancel each other out, so then you're left with the fee minus the travel/printing costs and you are liable to pay tax on the profit left over.

E.g Job pays £5, you have to buy something for £10. 2 miles travelled and 10 pages printed.
Income is the fee and the reimbursement = £15
Expenses is the purchase, travel and printing = £11.50
Profit = £3.50

Now reimbursement only jobs you'd have a very hard time to justify why you did the job other than to get "free stuff". Therefore the purchase is not an incidental benefit, the reimbursement is the ONLY reason you did the job.

http://www.hmrc.gov.uk/manuals/bimmanual/bim37400.htm Worth a read

ChickenGirl

On a totally different note, has anyone been told there are security issues over React and Bare websites when they're trying to log in, or is it just me. I've never had problems before but my security is now telling me they're sites are insecure.

Lil_Me_2

Boredupnorth wrote: »

http://www.hmrc.gov.uk/manuals/bimmanual/bim37400.htm Worth a read

Yes is it, but it's almost completely irrelevant.

The paragraph says so in clear terms. If the activity be undertaken with the object both of promoting business and also with some other purpose, for example, with the object of indulging an independent wish of entertaining a friend or stranger or of supporting a charitable or benevolent object, then the paragraph is not satisfied though in the mind of the actor the business motive may predominate. For the statute so prescribes.

Per contra, if in truth the sole object is business promotion, the expenditure is not disqualified because the nature of the activity necessarily involves some other result, or the attainment or furtherance of some other objective, since the latter result or objective is necessarily inherent in the act.

There is a difference between entertaining clients through choice and claiming tax relief, and having to buy a meal in order to receive the fee.

In our case in order for our businesses to survive most jobs require some aspect of purchase and reimbursement (and let's not pretend this is fun, it's a business and I certainly run it like one). Now the purchase is wholly and exclusively necessary for me to get the fee which I will gladly pay tax on.

As it says -

But an expense is not disallowed by ICTA88/S74 (1)(a) because the trader (or third party) obtains an incidental or personal benefit provided that it was not part of the purpose in incurring the expense to secure such benefit.

I don't do jobs for free stuff, I do jobs to get money. Lets face it, how many of us would really eat that much fast food if we weren't getting paid for it?

dazza.mk

HappyMJ wrote: »

I would not have normally ate my lunch at a high st pub so I am claiming the meal and the drinks as an expense. I would normally have a £2 meal deal or had a home made lunch.

Fee £0
Reimbursement £14.90
Cost of meal and drinks £14.90
Travel 6 miles @ 45p = £2.70
Paper printed £0.50

Loss of £3.20 which I offset against other MS income.

Exactly a free lunch, not incidental - need to try harder.

superliss

I think also how some see it, me included, is that some jobs are a 'perk' as an example I did a theme park last weekend. Now by the time i factor in mileage (100miles) printing, then the small fee for all the jobs I did there plus the reimbursement I wont have made much money. But I do like theme parks. (that one in particular) If I really didnt like theme parks I wouldnt do the job as I wouldnt feel it would be valuable use of my time. Me and Mrs superliss had a lovely time by the way. :-)

I am all very new to this as I have been doing it only for a few months and I work full time, others who have more experience and consider it to be a far more vital source of income may have a difference of opinion.

Lil_Me_2

HappyMJ wrote: »

I would not have normally ate my lunch at a high st pub so I am claiming the meal and the drinks as an expense. I would normally have a £2 meal deal or had a home made lunch.

Fee £0
Reimbursement £14.90
Cost of meal and drinks £14.90
Travel 6 miles @ 45p = £2.70
Paper printed £0.50

Loss of £3.20 which I offset against other MS income.

If questioned by the tax man you would have absolutely no leg to stand on. What is the benefit to your business of you doing that job?

If the only purpose is to create a tax loss then it's avoidance of tax and HMRC do not look kindly upon that!

dazza.mk

Makes me think of the home delivery shopping job for one of the companies on the front page, where the company specify
Fee: £xx
Reimbursed Expenses: £Delivery charge

Wonder how many people record it as

Fee £xx
Expenses £Weekly shop + £Delivery charge

=
£Big loss

And think they've got a good deal?

Lil_Me_2

superliss wrote: »

I think also how some see it, me included, is that some jobs are a 'perk' as an example I did a theme park last weekend. Now by the time i factor in mileage (100miles) printing, then the small fee for all the jobs I did there plus the reimbursement I wont have made much money. But I do like theme parks. (that one in particular) If I really didnt like theme parks I wouldnt do the job as I wouldnt feel it would be valuable use of my time. Me and Mrs superliss had a lovely time by the way. :-)

I am all very new to this as I have been doing it only for a few months and I work full time, others who have more experience and consider it to be a far more vital source of income may have a difference of opinion.

If it's a "perk" then it's not an incidental benefit therefore you should pay tax on the reimbursement.

Now repeat after me - "I only do jobs because I get paid for them, I do NOT do it for free stuff or for the perks."