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This update was first published in the April 2012 UK edition of Accounting and Business magazine.

HMRC has updated its view on the interpretation of section 319 of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA), which defines a mobile phone for benefits in kind purposes.

Section 319 provides exemption from income tax where an employee or company director is provided with a mobile phone, without transfer of ownership, by their employer.

Smartphones were previously excluded from the definition of mobile phones as HMRC viewed them as mini-computers, rather than mobile phones. HMRC has now changed its view and smartphones are now included within the definition of a mobile phone.
HMRC’s revised view opens the door for:

  • Employers to submit revised forms P11D/P11D(b) for 2007/08 onwards.
  • Employees/directors to submit revised self-assessment tax returns and/or claim a repayment of tax for 2007–08 onwards.

This is a welcome announcement from HMRC, not only in terms of content but also in terms of its timing, ie just prior to the start of ‘P11D season’.

Glenn Collins, head of technical advisory, ACCA UK

Last updated: 8 Apr 2014