TT174: Tax Refund on Smartphones

March 23, 2012

Following a change of opinion by HMRC, BlackBerrys, iPhones and other similar multimedia-equipped devices (known collectively as “smartphones”) are no longer viewed as taxable benefits in kind.
There was an existing statutory exemption for mobile phones such that one mobile phone could be provided to an employee without a taxable benefit arising provided ownership of the phone did not pass to the employee. However, HMRC believed that ‘smartphones’ did not fall within this exemption.

On 20 January HMRC announced that it had changed its interpretation and now accepts that smartphones qualify under the exemption.

The reality is that many employers have probably been providing such devices to employees without realising that HMRC believed a benefit arose.

If that is the case, the employers’ view has in a sense been vindicated by HMRC’s change of heart.

But where an employer has been returning the benefit via forms P11D HMRC have said that they are willing to review the position and refund any tax and class 1A NIC, with refunds being available going back to 2007-08.

So, if you are an employer who has provided just one smartphone to each employee (without transferring ownership) and returned P11D benefits for the use of that phone, you should contact us to discuss how to obtain your refund.

Employers only have until 5 April to claim tax refunds for smartphones that were issued from 2007-8 until 2010-11.

Meanwhile, you should note that devices such as Sat-Navs, ‘tablet’ and laptop computers are still outside the exemption and might result in a benefit to your employees.

It is always better to be safe than sorry regarding potential benefits and we are here to make sure you get things right.

Talk to Barnes Roffe today
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