Tax on mystery shopping and online surveys

antrobus

paddyrg wrote: »

Be VERY careful - HMRC may disagree with your deduction, and then you go on the list for a thorough investigation.

Personally I'm inclined to the opinion, given that something like 99% of the people who earn money from mystery shopping and online surveys never bother reporting the income to HMRC, that the chances of HMRC conducting a 'thorough investigation' of one of the few that has actually decided to be 100% honest and send them a few quid are rather remote.:)

eldaniel

Seriously I spent already most of the afternoon printing everything, putting it all together. I also believe that chances for checking person who can potentially earn few hundreds a year are very slim, but I am this type of person who is stressing more than it is worth it, especially when dealing with institution like HMRC.

I would love to go with assumption of £4/week cost for use of proportion of the house. In case of any check from HMRC, how do I explain how did I caluclated £4 a week which is £208 a year. I understand I can account proportion of electricity and internet. Could I also account for little % of mortgage interests, council house etc?? Or is it better to leave it as a overall estimated figure of £4 a week?
Many thanks for all your help.

Lil_Me_2

Mystery shoppers are far from being off HMRCs radar. I know of at least two who have been audited.

Honestly if you only earn a few hundreds a year I'm not sure that you could justify saying that a tablet was a good investment for your business. Yes you could get away with saying a percentage is for your business, but I'd make it a low one.

A red flag for HMRC would be if you only earn a few hundred and then have expenses that eat up your entire profit. You might find this useful - http://www.hmrc.gov.uk/incometax/relief-self-emp.htm

eldaniel

Ok, I spent too much time on it already. I am starting filling in my tax return now. I think it might be too much hassle and potentially unpleasant conversations with HMRC to declare even % of any device when income is less than £1000. I will just end up paying a little bit more in tax. I am just still not sure if I can assume that cost of using my house for business is something like £3-£4 a week or does it have to be calculated somehow (not sure how anyone could make it 100% spot on)

eldaniel

Lil_Me wrote: »

Mystery shoppers are far from being off HMRCs radar. I know of at least two who have been audited.

If you don't mind saying - How did it go? Was everything ok in regards to calculation, records keeping etc? Did anything unusual triggered those checks (i.e. claiming large expenses etc)?

MysteryMe

On the HMRC website there is a telephone number for advice and I would call them and get the opinion from the people that matter, HMRC. There are also small business workshops held regularly which are free to attend.

Lil_Me_2

eldaniel wrote: »

If you don't mind saying - How did it go? Was everything ok in regards to calculation, records keeping etc? Did anything unusual triggered those checks (i.e. claiming large expenses etc)?

The main case I saw where the person was quite open about what was happening it took about a year to get resolved and a lot of stress. The auditor from HMRC took the view that all of the expenses from MSing should not have been claimed for. i.e (total made up example) if you go to a supermarket and get reimbursed for £10 of shopping and £15 fee, HMRC took the view that the £10 of shopping was not an allowable expense as there was a personal gain to it. They finally settled and agreed that as long as there was money to be made (i.e a fee) that the expenses were allowed, and obviously all products bought were donated to charity and definitely not for personal use :cool:

The second case I believe may still be ongoing as the person had been deliberately doing reimbursement only jobs in towns miles away and claiming all of the expenses as a business expense just to bring down their taxable profit.

If you were to claim to bring in £10,000 a year and have £9,900 expenses chances are you'll flag yourself to HMRC.

I think you're in the same boat as me doing this extra on top of a normal job, and it is hard when you get taxed on all profit and your tax free allowance is already gone

HappyMJ

eldaniel wrote: »

Seriously I spent already most of the afternoon printing everything, putting it all together. I also believe that chances for checking person who can potentially earn few hundreds a year are very slim, but I am this type of person who is stressing more than it is worth it, especially when dealing with institution like HMRC.

I would love to go with assumption of £4/week cost for use of proportion of the house. In case of any check from HMRC, how do I explain how did I caluclated £4 a week which is £208 a year. I understand I can account proportion of electricity and internet. Could I also account for little % of mortgage interests, council house etc?? Or is it better to leave it as a overall estimated figure of £4 a week?
Many thanks for all your help.

There is no need to justify the £4 a week calculation. It's a low estimate and a reasonable estimate. Just make sure you actually did something every week to claim it.

eldaniel wrote: »

Ok, I spent too much time on it already. I am starting filling in my tax return now. I think it might be too much hassle and potentially unpleasant conversations with HMRC to declare even % of any device when income is less than £1000. I will just end up paying a little bit more in tax. I am just still not sure if I can assume that cost of using my house for business is something like £3-£4 a week or does it have to be calculated somehow (not sure how anyone could make it 100% spot on)

You can't make it 100% spot on. A reasonable estimate will be fine. Claiming much more than £4 a week will raise questions as to how you calculated it. Rooms dedicated to mystery shopping and surveys can be deducted proportionally based on time i.e 24 hours in 168 hours per week and space 100 sqft in a 1300 sqft house...but it's not really worth the hassle...just claim £4.

eldaniel wrote: »

If you don't mind saying - How did it go? Was everything ok in regards to calculation, records keeping etc? Did anything unusual triggered those checks (i.e. claiming large expenses etc)?

The only thing questioned on my enquiry was claiming mileage on reimbursement only jobs which led to a few more questions. The job questioned was a £150 hotel stay paying expenses only which was about 80 miles away (incurring a £72 mileage expense deduction). They didn't allow the mileage to and from the hotel as no income was earnt. They allowed only the reimbursement as an expense and no more so there was no profit or loss on that and similar jobs. The hours spent preparing and doing the job were also not allowed for a working tax credit claim for that week as there was no fee. There has so far (it really never did get resolved-it was 18 months ago-I don't think they really cared too much in the end) been no penalty and as I'm not a taxpayer anyway there was no tax due. As working tax credits allows holidays it did not affect the claim as I just changed it to be a holiday for that week instead.

eldaniel

Happy MJ I wanted to send you private message and I does not look like there is an option to do it. Is it something you blocked on purpose?
Thanks

paddyrg

antrobus wrote: »

Personally I'm inclined to the opinion, given that something like 99% of the people who earn money from mystery shopping and online surveys never bother reporting the income to HMRC, that the chances of HMRC conducting a 'thorough investigation' of one of the few that has actually decided to be 100% honest and send them a few quid are rather remote.:)

And you might be right - problem is neither of us knows for sure. No matter whether you've declared properly or improperly, an HMRC investigation is a massive pain and can be costly. This is why I suggest to avoid drawing fire by claiming for a premium tablet for a low-pay job. Unless you're willing to go to court to argue it (and it's not worth it for the sums involved) then *personally* I'd err on the side of caution.