I have a client who, last year, started doing a spot of mystery shopping. They are reimbursed for whatever they have bought, and given a small fee. Works out as peanuts, really.
Read the articles on the net, and they are all saying you can claim this, you can claim that etc etc...So, naturally the client sees this and wants to claim anything he can.
Let's say client has £50 of income from fees.. then he wants to claim his travel, a little bit of use of home (£2 per week based on the weeks he had jobs), and he wants to claim a little bit for his laptop.. you get the picture.
The travel alone puts him at a loss. The rest would make this larger. And he sees that he can offset trading losses against his employment income, and so get a tax refund.
Ok, so lets say we are at £100 loss when all is said and done. And this would happen every year, because its peanuts and will never be anything more.
I am intrigued... Can he claim loss relief against general income? Here's the bumf that leaves me to think he should be very careful in what he tries to claim...
I'm with Mark. There's no "reasonable expectation" of profit, and I cannot see how incurring losses on an ongoing basis, even for possible tax relief, is a commercial activity.
(I did work for a bank whose subsidiary purposely generated tax losses for group relief, but (a) it was a profitable activity once the tax losses stopped and (b) it was a bankfor Crissake ... it could do what it wanted!)
Thanks Mark and Iain, this is exactly how I am feeling about it. I wanted t put the feelers out, to see if there was an argument against it.. but guessing not, eh?
None from me. I'm with Mark and Iain. There has to be a business motive (reasonable expectation of eventual profit) for it to be considered a business.
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Shaun
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