Reply to: Paying for iPhone from personal bank account

[ContrataxLtd]

Is this even necessary if you place the order (and get an invoice) in the company name? I would have thought if the invoice was in YourCo's name and you paid for it on a personal card, it would be effectively like you lending the money to YourCo, i.e. you could simply reimburse yourself from the company account (no P11D implications either as you've paid for something on behalf of YourCo). I think the fact that it is invoiced to the company is enough to show it belongs to the company even if it was initially paid for by you.

I had to do this for one of my phones as my debit card wasn't being accepted when I placed the order - I simply stuck it on my personal card and claimed it back from MyCo (order and invoice was clearly in company name and also had company VAT number on it).

I used to be on a Three SIM only deal but did agree to a 12 month contract last year after haggling with them on the phone over unlimited data and more minutes.

There is a risk here that should be explored. If the phone is purchased in the company name and simply paid on a personal card I see no issue with this being reimbursed, no tax issues as the director has simply paid for the phone on behalf of the company and is being reimbursed for it.

However, if the phone is purchased in a personal name and then transferred to the company ('Transfer of assets form' as ThomserveBAS mentioned) then is this actually a sale to the company from a connected person and as such not eligible for AIA (100% tax write off in year one) but only WDA at 18% per annum, thus reducing the tax saving up front.

You could argue the phone isn't an asset to avoid this and in most circumstances I could probably argue this both ways, depending on the outcome that is needed but I can't help to think this is something HMRC would question is they wanted to dig their claws in!

This principle applies when anything is purchased personally and 'sold' to the company, especially items purchased pre trade where they can't be justified as pre trading expenditure.

Martin
Contratax Ltd

[TheCyclingProgrammer]

Any website where I can find information on how to accomplish this?
In my case, it is an iPhone purchased before creating my Ltd, so I purchased it personally and I have the VAT receipt.

I'm sure I will not be able to transfer it to the company at whole price tho, as there is now a new model in the market (6S) that effectively devalued mine.

As somebody explained on the previous page, it is possible to claim for pre-trading expenditure. You can also simply sell the device to YourCo. Speak to your accountant about the details and whether or not you can reclaim the VAT too.

[AnotherGuy]

I have purchased my last three iPhones via my LTD, in all three instances I have purchased them on my personal card (hey...gotta love those points/cashback deals) and then completed a "transfer of assets" form which basically transfers ownership of said device to MyCo with all that entails.

Any website where I can find information on how to accomplish this?
In my case, it is an iPhone purchased before creating my Ltd, so I purchased it personally and I have the VAT receipt.

I'm sure I will not be able to transfer it to the company at whole price tho, as there is now a new model in the market (6S) that effectively devalued mine.

[TheCyclingProgrammer]

I have purchased my last three iPhones via my LTD, in all three instances I have purchased them on my personal card (hey...gotta love those points/cashback deals) and then completed a "transfer of assets" form which basically transfers ownership of said device to MyCo with all that entails.

Is this even necessary if you place the order (and get an invoice) in the company name? I would have thought if the invoice was in YourCo's name and you paid for it on a personal card, it would be effectively like you lending the money to YourCo, i.e. you could simply reimburse yourself from the company account (no P11D implications either as you've paid for something on behalf of YourCo). I think the fact that it is invoiced to the company is enough to show it belongs to the company even if it was initially paid for by you.

I had to do this for one of my phones as my debit card wasn't being accepted when I placed the order - I simply stuck it on my personal card and claimed it back from MyCo (order and invoice was clearly in company name and also had company VAT number on it).

I used to be on a Three SIM only deal but did agree to a 12 month contract last year after haggling with them on the phone over unlimited data and more minutes.

[happyfeet75]

Thank you all, CP and Martin and others v helpful

Account has come back with

https://www.gov.uk/expenses-and-bene...s/whats-exempt

As stated you can provide your employee with a mobile phone or SIM, the top up will be made personally but the company can reimburse you the business portion.

(Which, tbh, I do not see that precise information on that link but oh well)

So I can get a handset through the business and put a personal sim in it, despite being told handset must be 'wholly and exclusively' for business just the day before. Guess even professionals find this stuff quite challenging.

Will just get the handset and put my personal sim in it for the moment, and look at porting to a sim in the MyCo name at some point, seems more cost-effective.

The idea of putting it through on my personal Amex to get the airmiles then doing a transfer of assets is enticing, but I'll wait until I've got the hang of the basics first!

Regards

[ThomserveBAS]

I have purchased my last three iPhones via my LTD, in all three instances I have purchased them on my personal card (hey...gotta love those points/cashback deals) and then completed a "transfer of assets" form which basically transfers ownership of said device to MyCo with all that entails.

In previous years, my wife (a director) had my castoffs, but this year she's got a new phone through the business.

Both phones are on (legacy) SIM-only deals with Three (which much to my amusement they keep trying to entice me off but I ain't budging) where we get unlimited everything for £15/month. Best of both worlds as far as I am concerned - business contracts tend to be very over priced so I stick to sourcing my own contracts.

[ASB]

I just wonder whether any of the accountants have had any challenges in practice.

One should buy the phone and contract through the company on a company tariff etc (notwithstanding the many permutations). In practice lots of people will just put through the personal phone contract, possibly having amended it to be addressed to the LTD.

As long as it is just one phone and one source of calls does HMIT ever complain in an investigation. Or more specifically do they ever complain and disallow (of course they can).

[TheCyclingProgrammer]

Good advice from Martin - as he says the main issue that arises here in terms of a BIK is when YourCo pays for any liabilities in your name. So even if you had a contract that you used exclusively for business, if the contract is in your name then the liability to pay it is yours, which is why YourCo can't pay for it without there being a BIK (I believe the term is settling of a Director's pecuniary liability).

Remember even if you pay for a personal SIM and use it, you can still claim for specific business calls as long as you can keep some evidence of these (e.g. an itemised bill identifying the business calls). What you can't do unfortunately is claim for any portion of the rental.

[ContrataxLtd]

Ok thanks I will look at this, since they do a '1 month' contract. Don't know how the accountant will think this is any different from GiffGaff goodybags tbh (i.e. you can cancel it after 1 month).



TBH I think s/he is just following the company's cautious guidelines. There has been conflicting information provided to me in subsequent emails. Will probably just get the handset and get on with my life. Or get another accountant (big co, should know the ropes).

I guess I just wanted to stay with GiffGaff, and port my existing number into a company-name SIM, and use GoodyBags. Will look at porting over to a SIM-only 'one month' contract (effectively what I have with a GoodyBag). Porting the number to a company one-month contract with Three would at least keep the accountant happy.

Cheers all

Hi Happyfeet75

For what it's worth, I think you will be fine buying a handset in the company name and paying for this from the company account. You then decide what to do with the SIM, put in a personal sim and pay for it personally or get something in the company name and pay for it from the company account.

I've got a couple of clients who are doing the GiffGaff thing and I don't see too much of a problem with it to be honest. Sign up to it in the company name and pay for the monthly recurring fee from the company account and you should be fine.

All you want to avoid is having the company pay for a personal liability from the company account as this has BIK implications and I feel the above avoids this. Also, at the end of the day the monthly cost is probably £10 or so which isn't much of a risk either.

Hope this helps.

Martin
Contratax Ltd

[happyfeet75]

Three do unlimited SIM packages for about £30. Just get that on the business account and buy a handset with the business debit card.

Contracts - as we well know - are for mugs!

Ok thanks I will look at this, since they do a '1 month' contract. Don't know how the accountant will think this is any different from GiffGaff goodybags tbh (i.e. you can cancel it after 1 month).

Did you ask your accountant why they don't believe it's acceptable to put a personal SIM in a company phone? Forget the wholly and exclusively thing, there is a specific exemption for a single phone for personal and business use.

It's your business so you're going to have to make your own call but I certainly don't lose sleep over buying a handset only through the business and then using my personal SIM in it.

TBH I think s/he is just following the company's cautious guidelines. There has been conflicting information provided to me in subsequent emails. Will probably just get the handset and get on with my life. Or get another accountant (big co, should know the ropes).

I guess I just wanted to stay with GiffGaff, and port my existing number into a company-name SIM, and use GoodyBags. Will look at porting over to a SIM-only 'one month' contract (effectively what I have with a GoodyBag). Porting the number to a company one-month contract with Three would at least keep the accountant happy.

Cheers all

[TheCyclingProgrammer]

Did you ask your accountant why they don't believe it's acceptable to put a personal SIM in a company phone? Forget the wholly and exclusively thing, there is a specific exemption for a single phone for personal and business use.

It's your business so you're going to have to make your own call but I certainly don't lose sleep over buying a handset only through the business and then using my personal SIM in it.

[psychocandy]

Yes next time I'll think about buying the phone via company and then paying for a personal sim only contract.

This time I just went for personal contract with free phone so you're in effect paying for the phone over the two years.

I looked into doing it via business but of course then the providers want to put you on a business tariff which costs more so it all ends up pretty pointless.

Whether its worth saving the 20% by stumping up the £500 or so from the company (rather paying it off over 2 years on a personal phone/sim contract) and then getting sim only. We'll see.....

[PerfectStorm]

Three do unlimited SIM packages for about £30. Just get that on the business account and buy a handset with the business debit card.

Contracts - as we well know - are for mugs!

[happyfeet75]

I have gone back to the accountant to ask for clarification, as they appear to be suggesting that only buying a handset, with a contract, is advisable, if it is for both business and private use.

So I asked if top-up vouchers constituted a contract - and if they were paid by the business too, would that satisfy both points of the exemption, and thus allow private use too with no reporting necessary. (Phone + SIM + monthly DD top-up via business account a la GiffGaff). They had not come across the concept of cash-less vouchers much before (which you can apply to mobiles), so they are doing some more digging.

I'm hoping this voucher provision is HMRC's attempt at filling in for what must be a very common scenario for small limited companies and sole traders for whom it's not cost effective to have a 12/24 month contract.

I don't use call time or sms much anyway, but will do for business - but not enough to merit being locked in for two-years at £50pcm. Whether that's a reasonable rationale I don't know.

The idea of putting my personal SIM in a company phone would seem to instantly blow the 'wholly and exclusive' one-handset-only exemption out the water, no? Or does 'wholly and exclusively' mean 'mostly'?

I am SA myself, and would prefer to put legitimate business things through MyCo and avoid impacting my personal paper-work too much.

Will update when there's more info.

[ASB]

I guess I could do the exact same thing (as JRCT pointed out) with my laptop as it also was bought before my Ltd was created, and it has a mixed use now. Or in this case it should be close to 100% business only? I use it aprox 50/50.

In any case, what is the procedure for "selling" something to my Ltd? I use IRIS OpenBooks (FreeAgent) if that matters. What is the "concept" to put in the books? I can ask to my Accountant of course.

Also, what happens if let's say in 3 months time I decide to get a new laptop or phone, and directly buy it through the Ltd? As then the Ltd will own 2 laptops and/or 2 phones...

Thanks in advance!

Your business can spend its money on exactly what it pleases. Coke, hookers etc. Or it can waste it on boring things like laptops or phones. All that really matters is the tax treatment. The former 2 being somewhat less generous than the latter.

In the absence of specific exemptions - which do exist for a phone and laptop - then wholly and exclusively applies. This doesn't mean no personal use, it means that the personal use needs to be incidental.

Maybe you install Visual Studio (don't forget to claim the cost) on the laptop and use it develop your app for the phone then that should be OK. Play games on the laptop and phone substantially then probably not.

Of course, you only ever knows for sure after the years have passed or there is no complaint in an investigation.