Mobile Phones


M

Matthew Brealey

I recently purchased an O2 XDA Exec PDA device, for business use (I
already have my own mobile phone). As they were a bit fussy with
respect of documentation and I wanted the phone straight away I put the
contract in my own name rather than that of the ltd company (of which I
am director)

The cost was £230.

There is a monthly cost of £17.58 inc VAT, for the tariff. As the
device is pretty useless as a phone, it is on a data-only tariff, and
is incapable of actually making any phone calls.

According to
http://www.hmrc.gov.uk/employers/ebik/ebik3/telephones-04.htm

Some employees use their own mobile telephones to make business calls.
Where this is the case, Class 1 NICs and tax are payable if you:
reimburse the cost of the mobile telephone, service charges or the cost
of private calls

In this case I would be reimbursing the cost of the phone and the
calls, and if the phone is deemed to be mine (on the basis that the
contract is in my name) there would be a benefit in kind.

It seems that I have two possible options (apart from just paying the
bill myself, which doesn't seem right, as it is a legitimate business
expense): I could either say that the phone is not in fact 'my own
telephone', but is actually the company's phone, and just put it down
as a debit to the director's current account. This is the easiest
option, but I am not sure whether HMRC would see it as correct given
that the contract is in my name.

The other option would be to transfer the contract to the company's
name and sell the phone at cost of £230. I am not sure whether O2
would allow a personal->business transfer, so I would prefer the first
option.

Any comments on what to do?
 
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