Expenses

[bsr1976]

Hello,

A quick, stupid question......

I'm still in start up stage, I'm buying equipment and software at the moment, and I'm going to be purhcasing a blackberry very soon. But I don't have a business bank account yet. So if I get a contract out for a mobile phone in the business name, but monthly payments are direct debited out of my personal account, how do I expense this back from the company once I'm up and running?

Thanks.

 

[Alpha]

Create an expense form.

Fill it in with the details of personal expenditure and attach receipts/invoices and file it away just like you would a purchase invoice in the expenses section.

When the company has funds then write a cheque/make a bank payment o cover.

 

[Ozzy]

Not the immediate answer you want, but are you sure you want your business to pay the mobile phone bill ? It can be deemed as a benefit and you get taxed on it.

Another thing to consider is that if you pay for things personally on behalf of a business, if the business fails to keep up payments or with a contract it is possible for the supplier to come after you personally for the debt.
If you have to buy the phone before you have a business account, I would get it personally and then transfer the account over to the business once it is up and running.

 

[Alpha]

Not the immediate answer you want, but are you sure you want your business to pay the mobile phone bill ? It can be deemed as a benefit and you get taxed on it.

Sorry Ozzy but no it will not be classed as a benefit. The only change to the legislation in this years budget was that previously it was allowed to give mobiles to members of the employees family as well(amazingly generous for HMRC) but it is now limited to employees only.

To qualify the mobile phone bill must be issued in the name of the company. If it is in the name of the individual the rental part is disallowed and any private calls should also be disallowed.

(Note the above is applicable to Limited Companies)

 

[bsr1976]

Hi, Thanks for the quick response.

So what if I wanted to purchase a second phone for my company sec who also happens to be my wife?

 

[Alpha]

Unlike a director the company secretary is not automatically classed as an employee.

You would have to start a PAYE scheme, provide her with a contract of employment and pay her wages for her to have a tax free mobile telephone.

If you simply gave her one it would be a taxable benefit in kind on you.

 

[dagr]

...

If you simply gave her one it would be a taxable benefit in kind on you.

Bloomin' 'ell - they're taxing everything these days!



(Oh come on, it's Friday)

 

[Ozzy]

Ok, I had to read this a couple of times to get that, very cryptic and sorry I'm tired so perhaps a bit slow

 

[Alpha]

DAGR

Please don't give up the day job

 

[Joyous]

Hello,

I'm still in start up stage, I'm buying equipment and software at the moment, and I'm going to be purhcasing a blackberry very soon. But I don't have a business bank account yet. So if I get a contract out for a mobile phone in the business name, but monthly payments are direct debited out of my personal account, how do I expense this back from the company once I'm up and running?

The other option is to set up a director’s loan account to keep track of all company expenses that have been paid out of your own pocket. When the company has sufficient funds you can draw down the loan account without any tax effects.

As Alan says ensure that all contracts, invoices etc are in the name of the company.

Regards

Joy

 

[Hayles]

[quote="Alpha")
To qualify the mobile phone bill must be issued in the name of the company. If it is in the name of the individual the rental part is disallowed and any private calls should also be disallowed.

(Note the above is applicable to Limited Companies)[/quote]

Erm, Alpha, could we have a longer chat on Monday please....

 

[bwglaw]

Oops - my mobile is in my name but 'addressed' to the company and the company pays the bill in full! Well I am taking the risk that HMRC won't check my accounts in depth!

 

[Rob Holmes]

Oops - my mobile is in my name but 'addressed' to the company and the company pays the bill in full! Well I am taking the risk that HMRC won't check my accounts in depth!

Is that not allowed?

We are also about to get mobiles for people.

Rob

 

[bwglaw]

I am also wondering if it is allowed. My Finance Director has not said anything and he does our accounts. At one time I even managed to pass through the 'rent' of my home and the Accountant at the time did not say anything!

Jonathan

 

[Alpha]

Mobiles (and also landlines for that matter).

If the bill is in the name of an individual but paid by the company it is a reimbursement of an individuals bill and hence should be declared on a P11d as a benefit in kind.
Expenses that are allowable against corporation tax should be wholly, exclusively and neccessarily incurred for the purposes of the business.
If the telephone bill is in the name of the individual the stance of the revenue is that the individual would have needed the telephone anyway for private calls and therfore rentals do not meet the 'wholly and exclusively' test and are therfore charged as a benefit if the company pays the bill. Likewise any private calls must be seperated out and the same applied.

If the mobile is in the name of the company then it is classed as wholly and exclusively for the business and the benfit in kind charge was removed many years ago (It used to be a fixed £200).

'Use of home as office' or rental as some call it has for many years been applied as such. however as Joy said the HMRC stance has changed considerably and their stance is now that as an employee of the company the director is gaining a benefit from charging the 'rent' and this must be declared on a self assessment return. (The reason outlined is a very simplistic view of the argument as its easter
)