HMRC have explained their policy on mobile phones provided by traders to employees.

In all cases, expenditure on connection and monthly network charges for mobile phones is seen as being incurred for business purposes. The VAT on this part of the phone bill is input tax. There should be no charge to output tax under the Value Added Tax (Supply of Services) Order 1993 (SI 1993/1507) (¶13-885), since it is not the policy of HMRC to apply the Supply of Services Order in respect of mobile phones.

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