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Telephone charges - tax deductible?

Telephone charges - tax deductible?

My UK based client also operates in Paris using a studio apartment (free of charge) that belongs to the aunt of one of the directors.  I am told that she doesn't live in the apartment, and that therefore the phone line - which is in her name - is exclusively used for business use.  I am uncomfortable about this as it doesn't feel like genuine exclusive business use.  There must at least be a possibility that she occasionally uses the apartment when in Paris and therefore could use the phone for personal reasons.  The HMRC guidance is pretty clear on there needing to be a second line in an employee's home for this to be acceptable exclusive use, but doesn't appear to address this sort of scenario where the apartment itself is not currently lived in.  Any thoughts?


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29th May 2011 13:00

Two questions in one

1 -  Can YOU accept the assurances provided by the client and file the return without insisting on an adjustment for the costs involved?

2 - Would HMRC accept the position without question?

If you have evidently explained the rules re W&E to the client and he has confirmed in writing his understanding etc it then becomes a questionof whether or not YOU believe him. If you do the return can be filed as is.

If HRMC challenge the deduction it then becomes a question of whether or not THEY believe the client.


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29th May 2011 20:56


... I've gone back one last time to ask if anyone ever uses the apartment for non business purposes, if the answer is no then I guess I have that in writing and will accept it. Thanks!

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30th May 2011 11:26

Standing costs not allowable...

... in my opinion.

It's not a matter of how the phone is used, but the purpose of the expenditure.  Specifically, there is a statutory basis for disallowing it if it isn't incurred wholly and exclusively for the purposes of the trade.

Given that the phone line is in the aunt's flat and in her name, the inference is that it existed before your client made use of the flat, at the aunt's behest.  Whilst she may not make any outgoing calls, she may want it there to receive incoming calls.

Thus any standing costs can be successfully challenged on the basis that they're not incurred wholly and exclusively for business purposes.

I'd imagine the purpose of expenditure on calls could be proven as a matter of fact with an itemised bill.

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