I'm a bit out of touch with the current state of play on putting
personal mobile bills through the books of a small limited company (one
man band).

The user was a sole trader so used his personal mobile for the business
and the number is now well known as his business mobile. User converts
to Ltd coy but still wants to use this number for the business but the
bills are in his personal name, not the name of the company.

My first thoughts are that he would be in trouble putting these bills
directly through the books, is this right?

If so are there any alternatives, eg paying the bill personally but
getting an allowance from the company to cover the cost of business
calls? Preferably by a fixed allowance rather than by documenting the
business calls. Spend is about £100 month so not to be sniffed at.

Final though is VAT, I'm guessing that VAT can't be recovered on a
personal bill put through the books?

Converting to a business tariff is possible but it's Orange and he would
lose free home broadband.
--
fred
FIVE TV's superbright logo - not the DOG's, it's ********

On Tue, 25 May 2010 22:37:34 +0100, fred wrote:

I'm a bit out of touch with the current state of play on putting
personal mobile bills through the books of a small limited company (one
man band).

The user was a sole trader so used his personal mobile for the business
and the number is now well known as his business mobile. User converts
to Ltd coy but still wants to use this number for the business but the
bills are in his personal name, not the name of the company.

My first thoughts are that he would be in trouble putting these bills
directly through the books, is this right?

If so are there any alternatives, eg paying the bill personally but
getting an allowance from the company to cover the cost of business
calls? Preferably by a fixed allowance rather than by documenting the
business calls. Spend is about £100 month so not to be sniffed at.

Final though is VAT, I'm guessing that VAT can't be recovered on a
personal bill put through the books?

Good guess

Converting to a business tariff is possible but it's Orange and he would
lose free home broadband.

You can claim for extra expense of business calls.

If you have a subscription where calls are free then there's no extra
expense of business calls.

You can be paid a fixed allowance by the company but you would have to
pay tax on it.

Peter Saxton wrote:

On Tue, 25 May 2010 22:37:34 +0100, fred wrote:

I'm a bit out of touch with the current state of play on putting
personal mobile bills through the books of a small limited company (one
man band).

The user was a sole trader so used his personal mobile for the business
and the number is now well known as his business mobile. User converts
to Ltd coy but still wants to use this number for the business but the
bills are in his personal name, not the name of the company.

My first thoughts are that he would be in trouble putting these bills
directly through the books, is this right?

If so are there any alternatives, eg paying the bill personally but
getting an allowance from the company to cover the cost of business
calls? Preferably by a fixed allowance rather than by documenting the
business calls. Spend is about £100 month so not to be sniffed at.

Final though is VAT, I'm guessing that VAT can't be recovered on a
personal bill put through the books?

Good guess

Why? Is there no consistent approach in the rules? If a company can
reclaim VAT on the fuel element of business travel where the employee is
paid a mileage allowance, why can a similar arrangement not apply to
phone charges?

Converting to a business tariff is possible but it's Orange and he would
lose free home broadband.

You can claim for extra expense of business calls.

If you have a subscription where calls are free then there's no extra
expense of business calls.

You can be paid a fixed allowance by the company but you would have to
pay tax on it.

Established practice in the case of landline phone bills used to be that
the cost of business calls was an allowable expense but line rental was
deemed dual use and therefore disallowed. But I understand that some time
ago the official view changed and it is now acceptable to apportion this.
Why should it be any different in the case of mobiles?

It seems to me that if he were simply to estimate a reasonable split for
personal vs business use of the phone, then the business element reimbursed
to him should be an allowable expense, i.e. not taxable.

Another consideration is that despite the personal name on the contract,
what he said about the phone number being widely known by his business
contacts suggests that this is de facto primarily a business phone, but
which he happens also to use personally. This would seem to be a good
argument for the company paying the whole bill but for him personally to
reimburse his company for the element of personal use (possibly adding a
notional value for the "free" broadband).

Naturally, if the company is paying the whole bill it would also reclaim
VAT on the whole bill. To avoid committing VAT fraud in respect of the
personal use element, his reimbursements to his company would need to be
put on a more formal footing, i.e. his company would have to invoice him
and charge him VAT.

In article , Ronald Raygun
writes
Peter Saxton wrote:

On Tue, 25 May 2010 22:37:34 +0100, fred wrote:

I'm a bit out of touch with the current state of play on putting
personal mobile bills through the books of a small limited company (one
man band).

The user was a sole trader so used his personal mobile for the business
and the number is now well known as his business mobile. User converts
to Ltd coy but still wants to use this number for the business but the
bills are in his personal name, not the name of the company.

My first thoughts are that he would be in trouble putting these bills
directly through the books, is this right?

If so are there any alternatives, eg paying the bill personally but
getting an allowance from the company to cover the cost of business
calls? Preferably by a fixed allowance rather than by documenting the
business calls. Spend is about £100 month so not to be sniffed at.

Final though is VAT, I'm guessing that VAT can't be recovered on a
personal bill put through the books?

Good guess

Why? Is there no consistent approach in the rules? If a company can
reclaim VAT on the fuel element of business travel where the employee is
paid a mileage allowance, why can a similar arrangement not apply to
phone charges?

Converting to a business tariff is possible but it's Orange and he would
lose free home broadband.

You can claim for extra expense of business calls.

If you have a subscription where calls are free then there's no extra
expense of business calls.

You can be paid a fixed allowance by the company but you would have to
pay tax on it.

Established practice in the case of landline phone bills used to be that
the cost of business calls was an allowable expense but line rental was
deemed dual use and therefore disallowed. But I understand that some time
ago the official view changed and it is now acceptable to apportion this.
Why should it be any different in the case of mobiles?

It seems to me that if he were simply to estimate a reasonable split for
personal vs business use of the phone, then the business element reimbursed
to him should be an allowable expense, i.e. not taxable.

Another consideration is that despite the personal name on the contract,
what he said about the phone number being widely known by his business
contacts suggests that this is de facto primarily a business phone, but
which he happens also to use personally. This would seem to be a good
argument for the company paying the whole bill but for him personally to
reimburse his company for the element of personal use (possibly adding a
notional value for the "free" broadband).

Naturally, if the company is paying the whole bill it would also reclaim
VAT on the whole bill. To avoid committing VAT fraud in respect of the
personal use element, his reimbursements to his company would need to be
put on a more formal footing, i.e. his company would have to invoice him
and charge him VAT.

That's a well reasoned argument, I like it.

I'll not raise a case with vat or tax as they'll just say no but I will
implement the safeguards you suggest and argue it face to face with
anyone they send for an inspection.

The established business use of the number was a clincher for me.

Thanks for your reply.
--
fred
FIVE TV's superbright logo - not the DOG's, it's ********

"fred" wrote in message ...

snip

That's a well reasoned argument, I like it.

Reason and logic rarely have much to do with tax rules.

Before making your final decision, you might wish to look at this ...

http://www.hmrc.gov.uk/paye/exb/a-z/...nes-mobile.htm

It always surprises me that so many small Ltd companies don't simply put the
contract in the Co. name.

Then the problem disappears - full CT relief, VAT reclaim, and no BIK. (But
watch out for the special rules for Blackerries etc).


--
Martin

On Wed, 26 May 2010 09:34:20 +0100, Ronald Raygun
wrote:

Peter Saxton wrote:

On Tue, 25 May 2010 22:37:34 +0100, fred wrote:

I'm a bit out of touch with the current state of play on putting
personal mobile bills through the books of a small limited company (one
man band).

The user was a sole trader so used his personal mobile for the business
and the number is now well known as his business mobile. User converts
to Ltd coy but still wants to use this number for the business but the
bills are in his personal name, not the name of the company.

My first thoughts are that he would be in trouble putting these bills
directly through the books, is this right?

If so are there any alternatives, eg paying the bill personally but
getting an allowance from the company to cover the cost of business
calls? Preferably by a fixed allowance rather than by documenting the
business calls. Spend is about £100 month so not to be sniffed at.

Final though is VAT, I'm guessing that VAT can't be recovered on a
personal bill put through the books?

Good guess

Why? Is there no consistent approach in the rules? If a company can
reclaim VAT on the fuel element of business travel where the employee is
paid a mileage allowance, why can a similar arrangement not apply to
phone charges?

The mileage allowance is not consistent with other rules so why do you
hold that up as the route to follow. Why don't you argue that the
mileage allowance should be removed?

Converting to a business tariff is possible but it's Orange and he would
lose free home broadband.

You can claim for extra expense of business calls.

If you have a subscription where calls are free then there's no extra
expense of business calls.

You can be paid a fixed allowance by the company but you would have to
pay tax on it.

Established practice in the case of landline phone bills used to be that
the cost of business calls was an allowable expense but line rental was
deemed dual use and therefore disallowed. But I understand that some time
ago the official view changed and it is now acceptable to apportion this.
Why should it be any different in the case of mobiles?

Because of the HMRC rules. Maybe somebody should challenge it.

It seems to me that if he were simply to estimate a reasonable split for
personal vs business use of the phone, then the business element reimbursed
to him should be an allowable expense, i.e. not taxable.

Another consideration is that despite the personal name on the contract,
what he said about the phone number being widely known by his business
contacts suggests that this is de facto primarily a business phone, but
which he happens also to use personally. This would seem to be a good
argument for the company paying the whole bill but for him personally to
reimburse his company for the element of personal use (possibly adding a
notional value for the "free" broadband).

Naturally, if the company is paying the whole bill it would also reclaim
VAT on the whole bill. To avoid committing VAT fraud in respect of the
personal use element, his reimbursements to his company would need to be
put on a more formal footing, i.e. his company would have to invoice him
and charge him VAT.

The company can pay the whole bill but then there would be a benefit
in kind and the payment would be disallowable in the company accounts.

In article , Martin
writes

"fred" wrote in message ...

snip

That's a well reasoned argument, I like it.

Reason and logic rarely have much to do with tax rules.

Before making your final decision, you might wish to look at this ...

http://www.hmrc.gov.uk/paye/exb/a-z/...nes-mobile.htm

It always surprises me that so many small Ltd companies don't simply put the
contract in the Co. name.

Then the problem disappears - full CT relief, VAT reclaim, and no BIK. (But
watch out for the special rules for Blackerries etc).

Thanks for your reply & link.

I think the mobile in question may fit the exception mentioned on that
page:

Employee’s own mobile – you pay the supplier directly

Exceptions

If the employee’s phone is acquired for business purposes and is only
used for business calls, then the following rules apply.

For company directors or employees earning at a rate of £8,500 or more
per year:
report on form P11D - section N – unless you have a dispensation for
this item
you have no tax or NICs to pay


If it were a new number and setup then he would be happy to have the
phone in the company name but it's such a long standing number that he
doesn't want to risk the number going out of his control.
--
fred
FIVE TV's superbright logo - not the DOG's, it's ********

In article , fred writes

I think the mobile in question may fit the exception mentioned on that
page:

Employee’s own mobile – you pay the supplier directly

Exceptions

If the employee’s phone is acquired for business purposes and is only
used for business calls, then the following rules apply.

For company directors or employees earning at a rate of £8,500 or more
per year:
report on form P11D - section N – unless you have a dispensation for
this item
you have no tax or NICs to pay


If it were a new number and setup then he would be happy to have the
phone in the company name but it's such a long standing number that he
doesn't want to risk the number going out of his control.

Sorry for the self follow-up.

It turns out it is to be a Blackberry so comes under assets made
available:

http://www.hmrc.gov.uk/paye/exb/a-z/...-available.htm

which doesn't have a section for 'you pay the supplier directly' but
does increase the latitude of the exception from 'business use only' to
'these exceptions can still apply even if there is an insignificant
amount of private use by the employee.'
--
fred
FIVE TV's superbright logo - not the DOG's, it's ********

I think you are eligible for some allowance from the company's behalf. You can get in touch with them over it. Of course you will have to pay tax, that just cannot be avoided.