Personal Use of Business Phone

KaelaH

I have a client who runs a small freight company (limited company). Unfortunately over the past year work has pretty much dried up to a point that he works on payroll driving vehicles for another company and is only putting a very small amount of work through his business in his spare time.
All expenses have pretty much stopped, except for finance on vehicle, accountancy fees, fuel for jobs and telephone bill. He is still VAT reg'd so we're still completing returns.
The query I have is that I want to check my reasoning behind his phone bill. We are still processing his phone bill as its for the number that he advertises his business with so currently the business claims the full line rental.
However, as he is now on payroll elsewhere and his sales are tiny by comparison, he has started recharging from the business his call costs over and above the line rental + vat.
Is this correct? Can the business still justify paying the whole line rental or should he pay some of this too?

Newbie

Ideally the mobile should be in the name of the company, see link for useful guidance http://www.accountingweb.co.uk/anyanswers/mobile-phones-internet-phones-tax-issues/500506

clegganator

A limited company can supply one mobile phone to an employee (so that includes directors) with no personal tax implication. Of course it should still go through as it is still a business expense regardless of the times he is trading in!

Monsoon

If it's landline, then if it's W&E business, then he can claim it, assuming he has a separate personal land line. If it's shared with his domestic landline, he can't claim it. He can claim the cost of calls that are WE&N business that are over and above any monthly package price.

To add to clegganator's point, note that smartphones are not classed as mobile phones, but are computers, so care needs to be taken. There is a lot of guidance in the HMRC manuals (BIM and EIM) on these matters.

clegganator

Yes, good point Monsoon. I was chatting to someone last night who has a BlackBerry but his work don't let him put anything personal on it, most likely because of this very rule. Wonder how long that rule will last given pretty much all new phones are smart phones...

Monsoon

clegganator wrote: »

Wonder how long that rule will last given pretty much all new phones are smart phones...

I've been wondering this for a while.

payrollpro

The problem only applies if the employee has both a work mobile and a PDA or smart phone. My understanding is that if the employee has one device and its a smart phone HMRC treat it as if it is the one mobile they are allowed. The only difficulty would be if HMRC discovered that the smart device was primarily a mobile computer and only in minor use as a phone.

They are unlikely to be able to, or even want to try and prove that one though. My work phone is a business Blackberry and I use it, I have no worries about having any queries.

Payrollpro

deanshepherd

I have had an iPhone for a while as my work phone (and only phone) and always treated it as my employer provided mobile (regardless of HMRC telling me its not a phone).

I am contemplating getting a Samsung Galaxy Note, as well as keeping the iPhone, which I would probably use more as a work smartphone, given the larger screen and stylus, but still use it exclusively for business calls as my non primary business phone but still 100% business use.

Interesting..

Monsoon

payrollpro wrote: »

The problem only applies if the employee has both a work mobile and a PDA or smart phone. My understanding is that if the employee has one device and its a smart phone HMRC treat it as if it is the one mobile they are allowed. The only difficulty would be if HMRC discovered that the smart device was primarily a mobile computer and only in minor use as a phone.

They are unlikely to be able to, or even want to try and prove that one though. My work phone is a business Blackberry and I use it, I have no worries about having any queries.

Payrollpro

Thanks PP and Dean, I've been doing the same with my BB, which is my only phone. It's a logical approach but who said HMRC were logical? I do feel a bit reassured though.

Bluewednesday

I'm sure I followed the link for if it is a smartphone and it seemed to have all the same rules as a mobile so I look at it the same way as you do i.e. treat it as a mobile phone