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Previously on "Old mobile phones and captial expentiture"
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Please bear in mind that you (can) have different calculations for accounting and tax purposes. For example, you can capitalise and depreciate the phone for accounting purposes but deduct the whole amount in calculating the Corporation Tax payable....👿
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Originally posted by TheFaQQer View PostThat's very, very, very bad advice. If the contract is in the name of the individual, then you can claim the cost of business related calls. Nothing else.
I hope he's better at one of these jobs than he is on giving accurate advice on the taxation of mobile phones.
The company should never have paid any of the line rental. With such a fundamental fault in the expenses you have claimed, I suspect that an old handset would be the least of your worries.
Fire your accountant, and find someone who knows what they are doing. Or ask him to prove how his advice is correct, given the HMRC employee expenses guidelines.
Difficult not to conclude that he makes his 'main' living from mobiles!
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Originally posted by EvolutionSPM View PostThe phone is with o2.
-Can't be in companies name, as new company with no credit history.
-Registered in my name (100% shareholder/director) and at the companies registered address.
-Will move to companies name as earliest opportunity - already done.
-My company stationery, CV, linkedin, etc quotes the work number
-I have a basic pay as you go mobile and keeping top-up receipts as evidence. I switch off the work one at weekends/holidays.
-The company needed a phone number and for various reasons can't use the home phone. Also not good when traveling for interviews/client site etc.
-I needed to access emails/linkedin/internet/cv updates whilst on the move.
Originally posted by EvolutionSPM View Post-To cover my access of personal internet (bbc news, facebook,etc) on the move, I reimburse the company 10% per month.
Originally posted by EvolutionSPM View PostHMRC have approved this.
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Originally posted by DaveB View PostIf it is the companies you need to determine the length of time over which company assets are depreciated (you have to declare this as part of your accounts, as company director you are in apposition to set policy on this).
Many companies operate a policy whereby depreciated kit is offered to employees for a nominal amount or free. If you have had the phone for two years and the companies depreciation policy writes it off after two years then the net value to the company is Zero and you can legitimately give it to yourself at zero cost provided the disposal is properly recorded.
Also, even if an asset is fully depreciated in the company's books that doesn't mean it has no second-hand value. Assets given to directors/employees at less than market value can still potentially incur a BIK.
I doubt HMRC would argue the toss over a phone as the second-hand value is likely to be negligible but for more expensive assets (e.g. laptops) its worth bearing in mind. The second-hand value of the asset would need to be reported on a P11D, less any money actually paid for the asset.
http://www.hmrc.gov.uk/payerti/exb/a...nsferred.htm#2
The company will also have to charge VAT on any sale of an asset if VAT registered. Additionally, if you are on the flat-rate VAT scheme and you originally reclaimed the VAT on the asset as it was part of a single purchase over £2k, then you must report the VAT on the sale of the asset at the full rate on your VAT return, rather than as part of your flat-rate turnover.Last edited by TheCyclingProgrammer; 30 June 2014, 14:03.
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Originally posted by EvolutionSPM View Post...snip...
HMRC have approved this.
Stuart
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Originally posted by EvolutionSPM View Post
Regarding the original question on do I need to buy the phone off the company? Is this correct? I am getting conflicting advice on this.
Stuart
If it is the companies you need to determine the length of time over which company assets are depreciated (you have to declare this as part of your accounts, as company director you are in apposition to set policy on this).
Many companies operate a policy whereby depreciated kit is offered to employees for a nominal amount or free. If you have had the phone for two years and the companies depreciation policy writes it off after two years then the net value to the company is Zero and you can legitimately give it to yourself at zero cost provided the disposal is properly recorded.
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Originally posted by TheFaQQer View PostYou got HMRC to agree that you could deviate from their expenses manual just because you were a new company?
Is the phone contract with Vodafone?
-Can't be in companies name, as new company with no credit history.
-Registered in my name (100% shareholder/director) and at the companies registered address.
-Will move to companies name as earliest opportunity - already done.
-My company stationery, CV, linkedin, etc quotes the work number
-I have a basic pay as you go mobile and keeping top-up receipts as evidence. I switch off the work one at weekends/holidays.
-The company needed a phone number and for various reasons can't use the home phone. Also not good when traveling for interviews/client site etc.
-I needed to access emails/linkedin/internet/cv updates whilst on the move.
-To cover my access of personal internet (bbc news, facebook,etc) on the move, I reimburse the company 10% per month.
HMRC have approved this.
Stuart
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Originally posted by EvolutionSPM View PostRegarding the original question on do I need to buy the phone off the company? Is this correct? I am getting conflicting advice on this.
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Originally posted by EvolutionSPM View PostDue to mitigating circumstances at the time we had to go down this route and we have approval off the HMRC for this.
Is the phone contract with Vodafone?
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Originally posted by TheCyclingProgrammer View PostIf the phone is purchased by the company then it belongs to the company and how you account for the sale depends on whether the phone was capitalised or not.
Stuart
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Thanks all for your responses. I am not 100% happy with the accountants service at the moment, hence the questions on here. Just finishing up a contract at the moment, it is nearly my end of year accounts and will look at choices then, I understand the rules on mobile phones, i.e.. personal contact = claim business calls only, business contract = claim monthly charge/calls. Due to mitigating circumstances at the time we had to go down this route and we have approval off the HMRC for this. The contract is now in the name of the company.
Regarding the original question on do I need to buy the phone off the company? Is this correct? I am getting conflicting advice on this.
Stuart
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Originally posted by TheFaQQer View PostYou could also reference this HMRC page:
If you haven't been doing that, then this opens up a whole other can of worms.
Of course, this is quite limiting and you'd probably have to demonstrate that its not used for personal calls. Seems a silly way of doing things when YourCo can provide you with one phone to use as you like as long as you get it in the company name.
OP: you shouldn't have been apportioning your contract rental as others have been pointing out to you although if you were advised to do so by your accountant I guess its not entirely your fault. I wouldn't worry about it too much...its unlikely to be an issue unless you have a compliance check and even then I think you'd have a reasonable defence against any penalties. But you'd still be liable for underpaid tax and NIC.
Regarding selling the phone, if the contract was in your name then the phone belongs to you. You are free to do what you like with it - sell it, give it away.
If the phone is purchased by the company then it belongs to the company and how you account for the sale depends on whether the phone was capitalised or not.
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Originally posted by kal View PostNot being able to expense a mobile phone unless its in the company name (and the money needs to come directly out of the company account I might add) is expenses 101, god only know what a mess your accounts are in, get a professional contractor accountant in and pay her whatever its takes to sort this mess out.
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Not being able to expense a mobile phone unless its in the company name (and the money needs to come directly out of the company account I might add) is expenses 101, god only know what a mess your accounts are in, get a professional contractor accountant in and pay him whatever its takes to sort this mess out.
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Originally posted by DaveB View PostGuessing he used him because he was his BIL, not because he was a contractor accountant.
Never, ever, mix business and family unless you absolutely have to.
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