My client is a small Ltd company with only himself on the payroll. He gets the usual monthly mobile bill each month which is his only phone So will obviously have some personal usage. The mobile bill is in his own name, not the company name and he is on the payroll declaring £660/month salary. I have two questions:
will his his personal usage have any impact on his payroll (benefit in kind) and can we claim the VAT on the phone bill?
If his company provides the telephone and pays the bill, then one telephone per employee is an exempt benefit regardless of the business and private chatter ratio. I think it applies to directors, too.
thats true but the company should supply the telephone. OR the director should be billed for the mobile phone personally in his position as director at the companies registered office (but that option would not help with VAT).
In the case of the poster the phone is in the taxpayer rather than business name so the company is not supplying the phone and should not be put through the company.
If the contract was through the company it would be a tax free benefit and the VAT would be totally allowable for the line rental and apportioned (simply/approximately rather than exactly. i.e estimate 40% private use) for the calls pro rata to business use.
If the mobile phone had been through the business then it would have been a totally tax free benefit as one (emphasis on one) mobile phone per person is allowable including all private calls.
As its not then the private calls (and possibly the line rental (see above)) is a benefit and only the cost of business calls would be an allowable expense.
Unless the phone is in the companies name then the VAT would not be reclaimable at all.
I think that this is a very good example as to why clients need to talk to us before they spend anything as they don't realise the cost of doing the right thing incorrectly.... Don't even get me onto garden sheds (sorry, mobile offices)....
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
