A telecom expense management consultant firm in the UK, Aurora Kendrick James (AKJ), has warned that the arrival of the iPhone in the UK might trigger a long predicted tax change for approximately 3 million mobile phone users. The story was covered by Cellular-news on Monday.

Personal Digital Assistants and BlackBerrys have already been reclassified by HM Revenues & Custom (HMRC) which said, "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."

Even so, in the current tax scheme, "fully expensed mobile phones provided to staff for business use are free of income tax liability and not seen as a benefit in kind," according to Matt Atkinson from AKJ. The iPhone could change all that.

"With HMRC already bracketing PDAs and Blackberrys alongside PCs, the iPhone could be about to herald yet a further re-think of the tax situation," Mr. Atkinson warned.

The issue is related to the personal use of the phone, for example, music playing. Mobile phones used primarily for business calls are in a different class than a mobile computer with significant personal usage and hence a benefit that could be taxed.

"Motorola’s Z8, Nokia’s E65 and other models like them are phones packed with leisure features alongside business applications.... The line between a personal benefit and a business requirement is becoming very blurred and the taxman is without doubt watching this space," said Mr. Atkinson.

The consulatant warned his clients to be very careful when then plan to replace their business phones and take into consideration the accounting, compliance and tax implications in the UK.