Firms are being warned to watch out for extra taxes when staff use their own mobile phones for work.

Accountants and business advisers at Grant Thornton, which has an office in Bradford, are warning firms not to be caught out by tax and VAT changes on mobile phone packages.

Ian Evans, tax partner with the firm, said: "Employees used to pay tax if they were allowed to make private calls on a mobile phone provided by their employer. However, despite the benefit charge being abolished from April this year, employers need to consider a number of issues before giving their staff mobiles."

He said the removal of the benefit only applied where the phone was provided by the employer.

"If the phone is owned by the employee and the employer meets the bill, that amount has to be reported by the employer as a benefit leaving the employee to claim for any business use. But if the employer provided employees with one of the pre-paid phone packages, then the "pre-paid" value would be treated as a cash voucher and taxed," he added.

The national insurance position depends on how the phone is provided.

"However it is not only income tax and national insurance which may cause confusion," Ian Evans said.

"All VAT on calls can may be recoverable but only when clear rules are imposed on the employee to prohibit the use of private calls.''

Converted for the new archive on 30 June 2000. Some images and formatting may have been lost in the conversion.