All inclusive phone bills

PoodlePoodle Experienced MentorRegistered Posts: 711
Dear all,

Any ideas on how I split the cost on a P11d where a director submits an all inclusive phone bill, with the contract is in his name and the phone line used for the business?

Would the same apply to mobile phones?


Poodle

Comments

  • DeanDean Experienced Mentor DevonRegistered Posts: 646
    If the phone bill is wholly settled by the company then the full cost would go on the P11D as the ‘duality of purpose’ rules will bite.

    If the director pays for the phone bill and the company re-imbrues the business cost then there is no P11D.

    Regards

    Dean
  • PoodlePoodle Experienced Mentor Registered Posts: 711
    Hi Dean,

    Thanks for your reply. I actually started to get the grey matter worrying about this after I posted the thread and so I phoned the MIP support line and my queston actually spun off into several other areas.

    This is the response that they gave.

    The telephone bill must be processed through payroll to enable Class 1 NI to be calculated as this is a pecuniary liability for the individual. This could be processed in the last payrun of the tax year as a director's NI is calculated annually.

    The whole of the tax bill must be entered under section 'N' on the P11d.

    When processing the SA for the director - NO relief is available because business expense relief is available on marginal costs and as this is an all inclusive bill to the director that could have private use, then the marginal cost for business is 'nil' as this cannot be calculated from the bill.

    However,the whole bill is allowable for CT as NI and tax will be paid by the director. Tax through coding.

    I am seriously considering insisting that all my client companies bring their accounts into me on a quarterly basis, at a minimum, to keep track of things like this. If they are not able to do this then I don't think that I want to know.

    Poodle
  • payrollpropayrollpro Trusted Regular Hampshire/SurreyRegistered, Working Together with HMRC Posts: 415
    Poodle,

    Sounds to me as if the support line is pretty well right and it is a common problem. As the account is in his name not only is the payment made by the company Class 1, it is Class 1 in the pay period in which the payment occurred, so if it has emerged now you already have a NIC failure on your hands because the NIC should not be made up now. Although the NIC is on the annual basis the sums for the telephone must still be included in the calculations at the time of payment, they cannot be left.

    You are right to insist on the accounts coming in to you more regularly because that is the only way to ensure the right values go through the right medium at the right time.

    I am concerned also that they are suggesting the amounts go in section N because if the bill is in the directors name and the company pays it, that is only section N if he is reimbursed. I would suggest that you check who paid the phone people because if it is the company directly then that is section B, not N.

    Payrollpro
  • PoodlePoodle Experienced Mentor Registered Posts: 711
    Hi Payrollpro,

    I am glad that you have responded on this as I have been fretting a bit about this and I am sure that this is overlooked by many and not processed correctly

    The bill is being paid by the director out of his private account not out of the company account, the expense is being processed through his DLA therefore I will be able to control when the actual reimbursement, transaction occurs on the DLA to ensure that the transaction goes into the correct period for the NI liability.


    I actually spoke with the client concerned today and he is more that happy to let me have his books quarterly to control this, not sure that he actually understood but at least I got my way :001_smile:

    Just got to work out how to process this through Sage now to ensure that only NI is allowed for.

    Poodle
  • DeanDean Experienced Mentor DevonRegistered Posts: 646
    If the director is paying for the telephone bill privately can you not just reduce the credit to his DLA to reflect the private element? If the full cost has been re-imbursed get the director to repay the private element!

    At the end of the day you have a private phone bill in a private name and the net effect is the company has only paid for the business element (regardless of money too'ing and fro'ing). It'll avoid P11D and Class 1 processing.

    Regards

    Dean
  • PoodlePoodle Experienced Mentor Registered Posts: 711
    Dean wrote: »
    At the end of the day you have a private phone bill in a private name and the net effect is the company has only paid for the business element (regardless of money too'ing and fro'ing). It'll avoid P11D and Class 1 processing.

    Hi Dean,

    Under normal circumstances that is exactly what I would do, however this is an "all inclusive bill" where it is not possible to split out the private/business elements and that is the problem, hence the post.

    Regards

    Poodle
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