Salary paid to self from revenue

How will the HO distinguish between funds taken out from the investment and funds taken out from revenue?

@ whiteroses, you need to show your audited or unaudited account during extension and all records of investment funds and revenue are usually separated in the account.

But don't forget that you as a director cannot count your salary with investment funds, so you shouldn't have any problem differentiating it.

Olasunkanmi wrote:@ whiteroses, you need to show your audited or unaudited account during extension and all records of investment funds and revenue are usually separated in the account.

But don't forget that you as a director cannot count your salary with investment funds, so you shouldn't have any problem differentiating it.

Thanks for your reply.
But how do you prove that the salary you are drawing is from the revenue, and not from your investment?
If I make a revenue of say 20000 and withdraw 10000 as salary, could HO still say that your withdrawal is from the 50000 that you invested? There is no way to really prove otherwise.

whiteroses wrote:

Olasunkanmi wrote:@ whiteroses, you need to show your audited or unaudited account during extension and all records of investment funds and revenue are usually separated in the account.

But don't forget that you as a director cannot count your salary with investment funds, so you shouldn't have any problem differentiating it.

Thanks for your reply.
But how do you prove that the salary you are drawing is from the revenue, and not from your investment?
If I make a revenue of say 20000 and withdraw 10000 as salary, could HO still say that your withdrawal is from the 50000 that you invested? There is no way to really prove otherwise.

Few months back i had asked same question but didn't got any satisfying answers. the problem is that HO is confusing Investment with Expenses but this is not true in accounting terms. The day when you induce money in to a business either in shape of SDL of SC its called investment but HO want you to use this investment there fore they do not want you to get it back in form of salary and hence this confusion of salary being paid from investment money.
So most logical answer is that if your business is generating profit then get it back in form of dividends.

Hi Whiterose,

I am not a very active member but since I have read your post, I will share my views on investment requirements.

My understanding is this investment requirements has two limbs:

1. to invest funds in cash in the bank account (this may be done by share capital or directors loan (private company) and if sole proprietor than just putting the funds in your business account) and that means the capital is invested.

2. to spend the investment in 3 years period. I read few posts previously where some forum members were confused on how do we differentiate that particular expense is from capital investment or profits. My understanding is this cannot be done realistically in accounting terms and under this visa you just need to show investment of 50k or 200k either from profits or capital.

Just to summarise first do the investment of 50k or 200k and than there should be spending of that same investment 50k or 200k either from capital or profits (doesn't matter).

Guys this is just my understanding and not legal or accounting advice.

Thanks