Mystery Shopping

amiehall

I am employed and pay tax under PAYE. In addition, I do self-employed work as a mystery shopper. I have registered my self-employment with HMRC and have a certificate of small earnings so no NI is due.

I understand that any profits are taxable. I am however confused by what expense reimbursements would be taxable and which wouldn't.

There are several ways to be paid, some jobs give a fee, some give money as a refund for something you've had to buy and some give both. Some also pay money towards mileage or parking. I understand that clearly the fee is income and is taxable.

The expenses refund is confusing me at present. Some jobs you would do could be refund only like you would be refunded the cost of a pizza in return for doing the report. Is the pizza taxed like a benefit in kind?

What about a more complex case where I might be given money off at a supermarket. Say for argument I am given £20 off my shopping. As part of that I might be asked to visit certain counters in the supermarket. If for example I don't eat fish yet am forced to buy an item at the fish counter, is my whole refund amount taxable as BIK? Can I discount the sum I was forced to spend on something I won't use?

Maybe none of the refund is taxable? It would really help me if I could clear this issue up as I can't really afford to take an expensive restaurant or hotel job with a £00's in refunds if that is taxable. There is no way I would visit the restaurant other than for work purposes.

I will pay whatever tax is due but it would help my accounting if I could understand how these expenses are treated for tax. Is there guidance I could read that would help me decided if something is taxable or not?

dazza.mk

Amie,

It's a slightly grey area, but revolves around the HMRC comments that you are allowed to get a personal benefit from deductible expenses as long as the benefit is incidental to the purchase.

So if you are taking a hotel or expensive restaurant where you are being reimbursed for the cost of the meal then the reimbursement is taxable (as you are doing the report for a free meal/night in hotel).

Whereas if you are MS'ing a fast food outlet, being reimbursed for the cost of the meal and being paid to review it then you can legitimately say that it is allowable, as you were doing the shop to earn the fee, the fact that you had to eat a meal to do so is incidental.

Lines between are slightly grey, ie: if the fee is minimal for a massive reimbursement it would be more of a struggle to say that you've taken the job for the fee rather than the "free goods".

In terms of your complex scenario I'd say 50:50 you are required to spend £5 (say) at the fish counter in order to get the rest of the £15 on your general shop, therefore if you do/don't eat the fish it is incidental to getting the other £15 therefore allowable, whereas the remainder of the £15 is taxable.

amiehall

So basically I should try my best to be honest and fair in deciding what expenses are and aren't allowable, I'm unlikely to get into issues with the tax man.