Chapter EIM21779
| Published date | 22 May 2014 |
| Record Number | EIM21779 |
| Court | HM Revenue & Customs |
In most circumstances the provision of one mobile ‘phone to a director or employee for private use is exempt from charge. The exemption covers the phone itself, any line rental and the cost of private calls paid for by the employer on that phone.
The exemption for mobile phones in Section 319 was substantially amended by Finance Act 2006. For a brief summary of the changes see EIM21778.
Changes to the definition of a mobile phoneFor 2006/07 onwards the definition of a mobile phone is extended to include apparatus designed or adapted for the primary purpose of transmitting and receiving spoken messages and used in connection with a public electronic communications service. This covers a connection (e.g. a SIM card) provided independently of a mobile phone. For example a SIM card provided by an employer to be used in a mobile phone that belongs to an employee.
Where apparatus is clearly designed or adapted for the primary purpose of transmitting and receiving spoken messages and is used in connection with a public communications service, the fact that it can also be used for other functions will not prevent it from falling within the meaning of “mobile phone.”
This means that smartphones will fall within the meaning of “mobile phone.” It is worth noting that certain devices that were primarily designed and adapted as Personal Digital Assistants (“PDAs”) in the past have evolved over time so that many modern consumer PDAs are likely to be smartphones. It is also worth noting that this is an area of rapidly changing technology and it is not possible to be certain about the application of the definition of “mobile phone” to future or new forms of smartphone.
It is important to note that there are many types of devices that have telephone functionality which do not qualify as mobile telephones. The definition does not cover apparatus that is designed or adapted for a primary purpose other than transmitting or receiving spoken messages, even if that apparatus is also capable of being used in this way.
Examples of apparatus that does not fall within the definition of a mobile phone include satellite navigation devices, devices that are solely PDAs and tablet and laptop computers.
In general, devices that use Voice Over Internet Protocol (“VOIP”) systems to make and receive telephone calls will not satisfy the primary purpose test.
One mobile phone for private use - exclusion of family membersBefore 6...
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