Should I claim my mobile phone ?

[Martin at NixonWilliams]

I'm thinking of doing the same. I'd be interested to hear the view of Martin at NW, if he's still watching this thread.

I can't see this being a problem.

As pointed out above, it makes sense from a cost point of view. I would expect HMRC to consider the additional costs involved with the business tariff.

Plus, if anything, you are doing them a favour. The cost of a handset alone compared with the cost of a 24 month contract is generally a lot less, and so a lower amount of tax is being reclaimed.

[TheCyclingProgrammer]

It's worth bringing up that if you are using a company provided phone, that you check its covered by any contents insurance you have in your name, as it's a company asset, not yours.

I checked this with my home contents insurer (Endsleigh) recently, as I have my company owned laptop on the policy as a named item. I also have mobile phone cover with them, again MyCo owns the phone. They told me that as long as I am the only person responsible for looking after the asset and it isn't used by other employees, then I would be covered. Other insurers might not like this though.

Their exact quote was:

As long as the laptop is solely your responsibility and it is not shared with anyone or passed around colleagues, then you are covered. If the laptop is owned by the company for any colleague to use, then this is not something we cover.

[mikedarv]

The handset I recently purchased didn't come with any earphones, so I'm thinking of getting some. Possibly noise cancelling so I can actually hear what's going on during some calls when I'm on the train. Could some for around £200 be classed as a reasonable hardware /equipment expense?

[TheCyclingProgrammer]

The handset I recently purchased didn't come with any earphones, so I'm thinking of getting some. Possibly noise cancelling so I can actually hear what's going on during some calls when I'm on the train. Could some for around £200 be classed as a reasonable expense?

Imagine yourself in a compliance interview with an HMRC inspector as you attempt to justify the expense. What do *you* think he will say when you tell him that a £200 pair of earphones was "wholly and exclusively" for business purposes? Is a £20 tax saving worth it?

FWIW, I think you'd be taking the piss, but a cheap pair of £20 earphones would probably be reasonable...but then you're only saving £2 in tax so what's the point?

Buy them yourself, cheapskate.

[mikedarv]

Imagine yourself in a compliance interview with an HMRC inspector as you attempt to justify the expense. What do *you* think he will say when you tell him that a £200 pair of earphones was "wholly and exclusively" for business purposes? Is a £20 tax saving worth it?

FWIW, I think you'd be taking the piss, but a cheap pair of £20 earphones would probably be reasonable...but then you're only saving £2 in tax so what's the point?

Buy them yourself, cheapskate.

Ha, yea I did think that almost immediately after posting. Although they would be wholly for business use it would be like trying to convince my missus that she is wrong, it’s just not going to happen, no matter how much evidence I have.

[Martin at NixonWilliams]

Imagine yourself in a compliance interview with an HMRC inspector as you attempt to justify the expense. What do *you* think he will say when you tell him that a £200 pair of earphones was "wholly and exclusively" for business purposes? Is a £20 tax saving worth it?

I agree with the view that HMRC would almost certainly seek to disawllow the claim on the basis it is excessive however the tax savings would be more than as stated.

The corporation tax saving would be £40 but there is also the tax saved by having the company pay for the expense rather than it coming out of your own pocket.

For example, a higher rate tax payer would need to declare a net dividend of £267 to get the £200 in his bank. So the tax saving could effectively be £107 (£67+£40) or even higher if your personal allowance would be restricted as a result of declaring the extra dividend or you are subject to the additional rate of tax.

[TheCyclingProgrammer]

I agree with the view that HMRC would almost certainly seek to disawllow the claim on the basis it is excessive however the tax savings would be more than as stated.

The corporation tax saving would be £40 but there is also the tax saved by having the company pay for the expense rather than it coming out of your own pocket.

Yes, £40, bit of a maths fail there.

For example, a higher rate tax payer would need to declare a net dividend of £267 to get the £200 in his bank. So the tax saving could effectively be £107 (£67+£40) or even higher if your personal allowance would be restricted as a result of declaring the extra dividend or you are subject to the additional rate of tax.

True I suppose, although I'm thinking pragmatically that the cash was available from personal funds already and that they were not a higher rate payer.

I still think it's taking the piss though.

Having said that, playing devils advocate, if a business purchase can be shown to be wholly and exclusively for business purposes, can HMRC disallow it on the basis of it being excessive? To pick another more extreme example, if I decide to purchase a £2000 laptop instead of a £1000 laptop, even though the £1000 probably would have done the job, would that make the purchase disallowable? I always thought that HMRC inspectors were not allowed to decide what is and isn't excessive as it's a matter of opinion, but merely whether it meets the wholly and exclusively test.

[SueEllen]

Yes, £40, bit of a maths fail there.



True I suppose, although I'm thinking pragmatically that the cash was available from personal funds already and that they were not a higher rate payer.

I still think it's taking the piss though.

Having said that, playing devils advocate, if a business purchase can be shown to be wholly and exclusively for business purposes, can HMRC disallow it on the basis of it being excessive? To pick another more extreme example, if I decide to purchase a £2000 laptop instead of a £1000 laptop, even though the £1000 probably would have done the job, would that make the purchase disallowable? I always thought that HMRC inspectors were not allowed to decide what is and isn't excessive as it's a matter of opinion, but merely whether it meets the wholly and exclusively test.

You need to ask yourself would the HMRC inspector have enough knowledge to know that the cheaper laptop would do for someone doing your job?

In the case above if you were a musician or did something in acoustics/audio then £200 headphones would be fine. It's about context.

I couldn't put pairs of builders' steel capped boots through the books without suspicion but if a small building company put a lot random IT peripherals they would be looked into.

[Martin at NixonWilliams]

Having said that, playing devils advocate, if a business purchase can be shown to be wholly and exclusively for business purposes, can HMRC disallow it on the basis of it being excessive? To pick another more extreme example, if I decide to purchase a £2000 laptop instead of a £1000 laptop, even though the £1000 probably would have done the job, would that make the purchase disallowable? I always thought that HMRC inspectors were not allowed to decide what is and isn't excessive as it's a matter of opinion, but merely whether it meets the wholly and exclusively test.

I agree with Sue Ellen, it's about context. I'm sure the computer would be fine either way, plus I would expect a £2,000 computer to bring more value to the business than a £1,000 computer would. I doubt the same could be said of the headphones.

I agree HMRC would seek to apply the wholly and exclusively test but this would not be easy to defend with costs that are clearly excessive for what they are. For example I have seen claims for a £500 pen and a luis vuitton laptop bag costing towards £1,000. I am sure both could be used only for business but there is clearly a non-business element, whether it be explicit private use of the items or just a fashion statement.

[Kess]

I can't see this being a problem.

Hmm, I just asked the question of my account controller at NW and he was adamant that a handset cannot be expensed by the company unless the SIM is also paid for by the company. To quote: "In order to claim for the handset, the contract (SIM) would need to be in the company name and paid for from the company account."

I wonder if this is a case of different accountants - even within the same company - interpreting ambiguous HMRC rules in different ways.