Reply to: Should I claim my mobile phone ?

[Kess]

Hi Martin,

No problem. I'll probably stick to a personal phone contract because I'm a light user and for me the personal deals are so much better than the business ones.

Kess

[Martin at NixonWilliams]

I might be misunderstanding you, but why would the underlying reason to use a personal SIM matter if no claim was being made for the costs of using the SIM?

I think it is me that has misunderstood, and possibly confused matters.

When coming back to this thread I wrongly assumed we were talking about claiming the SIM on the basis that this was being done only because a company SIM would be more expensive. I actually think this could be justified though I have no idea of how the pricing works (I'm stuck in yet another 24 month contract!).

[TheCyclingProgrammer]

The reason I felt the personal SIM would be ok in the scenario above is because of the cost savings compared to a company SIM. Your account controller was not aware of this.

I might be misunderstanding you, but why would the underlying reason to use a personal SIM matter if no claim was being made for the costs of using the SIM?

The fact that the exemption allows for one mobile phone for personal use would imply to me that while the costs of a personal contract cannot be claimed, that how the employee chooses to use the phone is down to them. I'm not sure how HMRC could disallow the purchase of the handset on the basis that its being used with a personal SIM when personal use is explicitly allowed. I don't think Kess wants to claim the cost of his personal SIM, he just wants to purchase the phone through the company.

[Martin at NixonWilliams]

Hi Martin,

Sorry, I'll have to correct you. I don't believe I asked if a personal SIM could be claimed on the company (which does sound dubious). The question I asked in my email was: "Is it feasible to buy a handset on the company but still use my personal SIM in it?" to which the response was: "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."

That sounded pretty categorical: it's not possible to claim a company handset unless the SIM/contract is also a company one.

Hi Kess,

I see. However, my point remain the same as we do not know if the personal SIM would be ok and therefore it is not something we would advise our clients to do.

The reason I felt the personal SIM would be ok in the scenario above is because of the cost savings compared to a company SIM. Your account controller was not aware of this.

I just wanted to make it clear that it wasn't down to different interpretations of the rules & that there was a reason for the difference between the advice given our clients and my opinion on a technichal matter, that's all

Martin

[Kess]

In your email to us you asked whether a personal SIM could be claimed

Hi Martin,

Sorry, I'll have to correct you. I don't believe I asked if a personal SIM could be claimed on the company (which does sound dubious). The question I asked in my email was: "Is it feasible to buy a handset on the company but still use my personal SIM in it?" to which the response was: "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."

That sounded pretty categorical: it's not possible to claim a company handset unless the SIM/contract is also a company one.

[Martin at NixonWilliams]

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.

Our advice is to have the contract in the company name and for the payments to be paid from the company account, this is the safest approach and it protects our clients from a challenge.

The context of your question was not the same as discussed in this thread. In your email to us you asked whether a personal SIM could be claimed, you did not say that the reason for wanting to do this is because the personal SIM is cheaper, which is why I and many others feel this might well be ok.

It would be unwise of us to suggest making claims that are ambiguous without good reason (i.e. because of the cost savings involved with a personal SIM compared with a company one), especially with something as common as a mobile phone as this is claimed by the majority of our clients.

I hope this explains.

Martin

[TheCyclingProgrammer]

* Company buys a new handset and a PAYG SIM and provides this to the employee for business and personal use. Company owns the handset and pays for PAYG top-ups, in effect the 'contract' is with the company. Perfectly legit and an allowable business expense.

It's interesting reading the comments in this thread. By far the biggest saving you can make is to ditch the 'free' phone and buy it outright instead. Then get a SIM only deal, be that PAYG or monthly contract with 'free' minutes included.

I agree. I happily use my own personal SIM but being able to get the phone through the company is helpful and it's good being free of a long term contract. Much more flexibility and IMO being able to shop around for personal deals is likely to save you more money than any tax saved by getting a business contract (depends on your usage pattern I suppose).

Not to mention if you can reclaim the VAT if on the standard scheme or if on the FRS and you can get the phone as part of a bigger (> £2k) capital purchase from the same supplier.

[Contreras]

Any of the following would be fine:

* Employee buys the handset and pays for the contract and claims the cost of business calls only. The calls are not exempt, but can be claimed, but you cannot claim the handset cost or line rental.

* Company pays for line rental, in company name, employee uses the SIM in their existing personal handset. The line rental is exempt.

* As above, but company also buys a new handset for the employee to use. Cost of handset and the line rental claimable.

* Company buys handset for employee to use for business and personal use but doesn't provide a SIM or contract. Employee is free to find the best deal for them or use a PAYG SIM. Line rental or topups are not claimable but business calls still are if there is an itemised bill as proof.

* Company buys a new handset and a PAYG SIM and provides this to the employee for business and personal use. Company owns the handset and pays for PAYG top-ups, in effect the 'contract' is with the company. Perfectly legit and an allowable business expense.

It's interesting reading the comments in this thread. By far the biggest saving you can make is to ditch the 'free' phone and buy it outright instead. Then get a SIM only deal, be that PAYG or monthly contract with 'free' minutes included.

[TheCyclingProgrammer]

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.

The HMRC rules aren't that ambiguous. A business is allowed to provide one handset per employee.

It can also pay for the contract as long as it's in the business name, but not if it's a personal SIM.

Nowhere do they say that the handset is only allowable if it's used with a company contract.

Details of the exemption are here:
http://www.hmrc.gov.uk/manuals/eimanual/EIM21779.htm

Any of the following would be fine:

* Employee buys the handset and pays for the contract and claims the cost of business calls only. The calls are not exempt, but can be claimed, but you cannot claim the handset cost or line rental.

* Company pays for line rental, in company name, employee uses the SIM in their existing personal handset. The line rental is exempt.

* As above, but company also buys a new handset for the employee to use. Cost of handset and the line rental claimable.

* Company buys handset for employee to use for business and personal use but doesn't provide a SIM or contract. Employee is free to find the best deal for them or use a PAYG SIM. Line rental or topups are not claimable but business calls still are if there is an itemised bill as proof.

Edit: one more important point. The provision of a handset and/or line rental for personal use is *exempt* under s319 meaning it does not have to go on the P11d. However the cost of business calls are *not* exempt and must be reported on your P11D unless you have a dispensation, and they must then be reclaimed as a business expense on your SAR.

[TheCyclingProgrammer]

If the phone is a business phone why wouldn't you put a business paid for sim in it?

Because a personal SIM is often cheaper. As has been mentioned above, there nothing to stop you from using a personal SIM, you just can't claim it (although you can still claim for business calls). The handset can be provided for personal use as well as business use (I don't think the exemption places any restrictions on how the handset is used).

The cost of a handset provided primarily for business use is exempt under different legislation already (subject to the "no significant personal use").

In other words, I believe a company can provide as many handsets as it wants to an employee if it's solely for business use and personal use is not significant under s316 (the general rule for assets placed at an employees disposal). However there is a specific, separate exemption for the provision of phones for personal use and it's limited to one handset. (S319)

[Kess]

If the phone is a business phone why wouldn't you put a business paid for sim in it?

You are allowed to use business equipment like phones and computers for some personal use.

As mentioned earlier, I'm a light phone user and have found that personal SIM contracts tended to be more cost-effective. Having said that, however, I am now inclined to switch to a business one.

[SueEllen]

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.

If the phone is a business phone why wouldn't you put a business paid for sim in it?

You are allowed to use business equipment like phones and computers for some personal use.

[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.

[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.

[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.