Personal mobile contract, business use

Good guess

You can claim for extra expense of business calls.

If you have a subscription where calls are free then there's no extra expense of business calls.

You can be paid a fixed allowance by the company but you would have to pay tax on it.

Why? Is there no consistent approach in the rules? If a company can reclaim VAT on the fuel element of business travel where the employee is paid a mileage allowance, why can a similar arrangement not apply to phone charges?

Established practice in the case of landline phone bills used to be that the cost of business calls was an allowable expense but line rental was deemed dual use and therefore disallowed. But I understand that some time ago the official view changed and it is now acceptable to apportion this. Why should it be any different in the case of mobiles?

It seems to me that if he were simply to estimate a reasonable split for personal vs business use of the phone, then the business element reimbursed to him should be an allowable expense, i.e. not taxable.

Another consideration is that despite the personal name on the contract, what he said about the phone number being widely known by his business contacts suggests that this is de facto primarily a business phone, but which he happens also to use personally. This would seem to be a good argument for the company paying the whole bill but for him personally to reimburse his company for the element of personal use (possibly adding a notional value for the "free" broadband).

Naturally, if the company is paying the whole bill it would also reclaim VAT on the whole bill. To avoid committing VAT fraud in respect of the personal use element, his reimbursements to his company would need to be put on a more formal footing, i.e. his company would have to invoice him and charge him VAT.

That's a well reasoned argument, I like it.

I'll not raise a case with vat or tax as they'll just say no but I will implement the safeguards you suggest and argue it face to face with anyone they send for an inspection.

The established business use of the number was a clincher for me.

Thanks for your reply.

Reason and logic rarely have much to do with tax rules.

Before making your final decision, you might wish to look at this ...

Then the problem disappears - full CT relief, VAT reclaim, and no BIK. (But watch out for the special rules for Blackerries etc).

The mileage allowance is not consistent with other rules so why do you hold that up as the route to follow. Why don't you argue that the mileage allowance should be removed?

Because of the HMRC rules. Maybe somebody should challenge it.

The company can pay the whole bill but then there would be a benefit in kind and the payment would be disallowable in the company accounts.

In article , Martin writes

Thanks for your reply & link.

I think the mobile in question may fit the exception mentioned on that page:

Employee?s own mobile ? you pay the supplier directly

Exceptions

If the employee?s phone is acquired for business purposes and is only used for business calls, then the following rules apply.

For company directors or employees earning at a rate of £8,500 or more per year: report on form P11D - section N ? unless you have a dispensation for this item you have no tax or NICs to pay

If it were a new number and setup then he would be happy to have the phone in the company name but it's such a long standing number that he doesn't want to risk the number going out of his control.

In article , fred writes

Sorry for the self follow-up.

It turns out it is to be a Blackberry so comes under assets made available: