"When's a mobile not a mobile?" asks UK taxman

According to telecom expense management consultant Aurora Kendrick James, the taxman might be about to reclassify some mobile phones as a computer, in a move that may affect over 3 million business phone users in the UK.

HM Revenue and Customs has already reclassified Personal Digital Assistants stating that “technology has developed to such an extent that PDAs and Blackberrys now have additional functions more typically associated with a computer and so can no longer be considered primarily as a mobile phone.”

Now, according to AKJ’s MD, Matt Atkinson, the iPhone could be an unwitting catalyst of change when the taxman considers the business mobile phone market.

“As things stand, fully expensed mobile phones provided to staff for business use are free of income tax liability and not seen as a benefit in kind. However in a technology driven market, mobile phones are becoming increasingly like a personal computer which is treated very differently for tax purposes.

“With HMRC already bracketing PDAs and Blackberrys alongside PCs, the iPhone could be about to herald a further re-think of the tax situation,” he warns.

“If there is significant personal usage of the iPhone – and its music heritage and consumer features are all driven towards leisure usage – it would be very hard to argue that it should not be treated as a benefit in kind and subject to income tax.”