ILR - Accountants letter showing gross income

Hi

I am applying for ILR (Tier1), one of the evidences I am submitting is accountants letter/summary of invoices
The letter is showing my gross income.

Is it ok to show gross income or do I have to show net income also (ie gross income-expenses=profit)?

The other evidence is business bank statements.

Looking forward to the reply.

Regards
Artirix

It is better to show the breakup in the accountant letter, just to make it simpler for the case worker.

The monthly breakup of the income is given but there is no mention of the expenses and hence net income is not calculated.

Is it mandatory to show net income or gross income should be ok?

Regards
Artirix

In addition to the question, does the letter from accountant necessary for cases where you have stopped being self employed and you are now in full time employment job for ILR
EXAMPLE:
3 YEARS - SELF EMPLOYMENT
2 YEARS - EMPLOYED

It is not mandatory to show Net income, the earnings are based on gross earnings. However, not sure if your expenses will be accepted as part of your gross income ? Were there any taxes paid on the expenses ?

HarryJones - It is required to submit the accountant letter for the period you are using to qualify for your ILR. ie., the 12 months within the 15 month window prior to your ILR application. That said, if any of that previous 3 year period was used for an earlier extension application, then it is good to have in hand to answer any queries that may crop up. (Like it did in my case here (click) )

Good response from you Orelly.
Thank you.

The more documentation the better from both Accountant and HMRC

Thank you Argus.
Can you use the letter that the accountant initially prepared years back during the extension period which obviously I that HO should have a copy or you need to collect a fresh letter from accountant?

@ Harry Jones - You should be asking your questions in a separate thread. My original question seems superseded by your question.

@O_Relly - Taxes are paid on profit not on expenses.

I would appreciate if someone answer my original question.

Thanks

Is it ok to show gross income or do I have to show net income also (ie gross income-expenses=profit)?

@O_Relly - Taxes are paid on profit not on expenses.

Sorry but taxes are paid on gross income and not on profit. Profit is what is retained after paying out your corporation tax.

I think you are getting confused about gross income that is being generated into the company account prior to paying corporation tax. You cannot claim earnings on this gross. You can claim earnings on profits retained in company account or on the gross salary + dividends paid into your personal account from the company account.

Thanks O_Relly for your response.

So will the accountants letter be accepted? Considering that it only shows monthly gross income that is paid in my business account.

I am NOT submitting any salary slips or dividends.

Regards

So will the accountants letter be accepted? Considering that it only shows monthly gross income that is paid in my business account.

No it will not, you can only claim earnings based on net profits retained. See point 92 below from pg20 of the policy guidancebelow,

92. If you are self-employed and have chosen to retain the profits within the business, your
earnings are limited to the share of the business’s net profits to which you are entitled.
The appropriate proportion of the net profit of the business (that is, after tax and
outgoings) can therefore be counted as your gross salary. We will only consider profits
made during the appropriate 12-month earnings period for which you are claiming.

So if the accountants letter has

Gross Income

Net Income

would that be sufficient or do I need some thing else?

Considering I am not submitting salary or dividends. I run my own limited company.

Regards

As long as your accountant letter details the net profits retained based on the income generated within the 12 month period, that should be fine.

It should be accompanied by invoices raised along with business bank statements.

Hi O_Relly

The format of the accountants letter is


Month,Invoice Date, Paymnent Date,Gross Income (£)



Total Gross Income

Net Income

Monthly gross income is mentioned for the 12 months, then in the end it was totalled and total gross income was mentioned and then net income was given. There are no details of monthly expenses.

Is this acceptable to HO?

Hi

Can anyone else please reply to my last query?

Regards

artirix wrote:Hi

Can anyone else please reply to my last query?

Regards

As advised above, & based on the regulation quoted above (point/para 92), such a document needs to show nett profits clearly; (not just nett income).
Suggest show that information to your accountant.