Mobile phone for self employed

How much business use of a mobile phone is reasonable?

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Hi everyone

We had a visit from HMRC recently regarding CIS clients and their refunds for the last couple of years. The feedback from HMRC on how we process client records and tax returns was really positive and the only thing really they have suggested is an amendment program for mobile phone use. We currently include the client's mobile phone bills in the accounts and then add-back a percentage that the client deems is private use. The HMRC officer at the visit said they conducted research in April this year to establish how little a phone contract can be bought for and arrived at £17 per month. They then applied a 70% business use portion and are now offering a fixed £145 mobile phone allowance for CIS clients in lieu of whatever figure (if greater and after add-back) is in the tax return.

I can't for the life of me find material reference to this anywhere on the internet so I asked them for something supporting what they say.

I don't have a big problem with treating cases like this going forwards but amending client's 2016/17 and 2017/18 tax returns for maybe £15 of additional tax and class 4 NIC??

I'd welcome any thoughts from AW members.

Thanks

Paul

Replies (5)

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By ireallyshouldknowthisbut
14th Sep 2018 16:11

What do they actually spend?
What amount is actually business?

That would be my starting point.

Surely this is just "advisory" unless your client is under investigation. They wont open one for £15.

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Replying to ireallyshouldknowthisbut:
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By pauldh1978
14th Sep 2018 16:52

I guess I didn't really mean to ask what was reasonable I just wasn't sure what to put as the subject!
We always check what the client spends and then discuss the private use add-back. HMRC are suggesting we restrict every CIS client's mobile phone claim to £145 and actually undergo an 'amendment program' to amend each tax return for 2016/17 and 2017/18. They want a list of every CIS client we have but none are under investigation.
Seems like a bizarre waste of our time and no doubt HMRC's for what across the board may end up being £1k of additional revenue across the whole range of CIS clients!

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By Tim Vane
14th Sep 2018 16:44

Thoughts:
1. Life is too short.
2 See 1.

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Replying to Tim Vane:
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By pauldh1978
14th Sep 2018 16:54

Couldn't agree more - I don't imagine there is going to be anything concrete they can give me to support what they are proposing and without it I'm getting increasingly more reluctant.

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By Paul D Utherone
14th Sep 2018 17:58

If the numbers are small and you reckon the £145 is there or thereabouts and not worth arguing about could you not offer to use the flat rate offered going forward, but not reopen previous years as the amounts are negligible.

The cynic says if they adjust a large number of clients for the square root of BA all that achieves is a tick & a gold star for HMRC for closing nnn reviews, whilst ignoring the fact that the actual tax take was SFA

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