Help needed for extension confusion !!!!

Hello everyone,

I'm on Tier1 50k visa and my extension application is with Home office.

I'm on my company's payroll from last 3 years. In first 2 years company was in loss but in 3rd year we make some profits.

50k was In my business bank account and all 3 years turnover from business also goes in my business bank account.

I paid more than 60k to my employees + other running expenses like rent, accountant fees, tax etc.

My 3rd years unaudited accounts shows £50,941as director's loan and 3rd years closing balance of my business bank account was £20'400.



Is there anything which I did wrong with my salary?
Does that change the director's loan amount?

Please help,
Thanks

as per previous threads and my understanding, you cannot take your own salary from the director loan amount.

xeesee wrote:Hello everyone,

I'm on Tier1 50k visa and my extension application is with Home office.

I'm on my company's payroll from last 3 years. In first 2 years company was in loss but in 3rd year we make some profits.

50k was In my business bank account and all 3 years turnover from business also goes in my business bank account.

I paid more than 60k to my employees + other running expenses like rent, accountant fees, tax etc.

My 3rd years unaudited accounts shows £50,941as director's loan and 3rd years closing balance of my business bank account was £20'400.



Is there anything which I did wrong with my salary?
Does that change the director's loan amount?

Please help,
Thanks

Thanks for your reply.

I spend more then 50k on my business other than my own salary and 20k is in business bank account.

My accountant is confused and saying that these things are beyond his knowledge and experience.

Hi xeesee,
It looks to me that you have invested at least £60K+£20400+your salary.
You can make a director loan agreement stating all the amount you have transferred to your business bank or mentioning only the money minus your salary.
However You should claim for investment for the money excluding your salary.
I believe HO only wants to see that you have invested at least 50000 to your business without claiming any salary from this £50K.
Good luck

Thanks meesha,

My extension application is with home office. I invested £50,941 from my pocket and remaining money we generated from the business turnover. In 1st year my business was in loss but I still took salary from the business.

My DLA says £50,941 same as my unaudited accounts

Thanks

xeesee wrote:Thanks meesha,

My extension application is with home office. I invested £50,941 from my pocket and remaining money we generated from the business turnover. In 1st year my business was in loss but I still took salary from the business.

My DLA says £50,941 same as my unaudited accounts

Thanks

Buddy,

there is big confusion over this issue...Some people say HO will deduct director salary from revenue (sales or turnover) and some people say HO will deduct from director loan if the company was in loss (and director was taking salary)..

But i believe may be right or may be wrongm that calculate your business total expenditure over 3 years excluding director salaries total then minus from director loan injected total in business in 3 yrs.

the difference of both, should be available in your business account..as per accountant explanation but how HO take this thing for calculation of real director loan invested not fully explained in policy guidance that which approach they use whether revenue(sales or turnover) or profit approach..

we wait for others successful applicant to respond and seniors like zimba etc too

Hi everyone in my opinion its always better to pay back any directors salary you had before ext . If you can afford to that it will be the safest option either way you took that salary from loss,profit,revenue or directors loan . its better to play safe if you are not sure how they would count . Keep in mind if you get refused due to short of directors loan amount it will be all most impossible to fix that as all the investment has to maid during initial leave . its not cheap to reapply specially when you have any depended with you . why to take chance just follow the guide instead of blaming some one or yourself after refusal .

It should be calculated on yearly basis in my opinion. Company being in loss means NOTHING. You can have a lot of revenue and still be in loss, that is not a determining factor.

The safe way to think about is this over a year:

ALL your expenditure (excluding your remuneration) must be be subtracted from your revenues first.
If you are left with a negative value after this, then you paying the rest from your investments. In this scenario you should NOT pay yourself any salary.
If you are left with a positive value after this, then you can pay the rest to yourself as salary.
Also, If you have fully spent all your investment then you can take any remaining revenues as salary anyway.

Thanks for your reply,

I took salary every month and profit or loss comes at the end of the year. What shall one can do after taking salary the whole year.

My application is with Home Office already and I took salary while my business was in loss.

Is there anyway I can rectify this mistake? If my this 1st application refused.

Thanks

AGAIN AND AGAIN, there is NO formula or rules governing this. Wait to hear back from them to see if that is an issue

Dear Zimba
Could you plz kindly explain the following issue as well.
When I writing the business plan I consulted with accountants and they told me this is right but now I am worried they think I amgoing to take £50k.

In my calculation, the revenue is enough every year to cover all expenses and salaries, so I mentioned In the plan that I will take £18k every year as salary to avoid further questioning from HO that how you will survive. But only in mid of first year I will buy equipments about £27k from my investment. In the profit and lost sheet, the company is in profit (even if I take salary) but in balance sheet it is clear buying stuff from investment. It is only one-off purchase and the rest of money will remain in the account. Is it a problem?!!

xeesee wrote:Thanks for your reply,

I took salary every month and profit or loss comes at the end of the year. What shall one can do after taking salary the whole year.

My application is with Home Office already and I took salary while my business was in loss.

Is there anyway I can rectify this mistake? If my this 1st application refused.

Thanks

If you think they'll refuse because of this, invest the amount back (if possible) while you are waiting to hear back, just in case you need to reapply.

Hi,

Looking at the above discussion, I think I should also add my opinion. I think if the revenue generated(excluding director's loan) is equal or more than the salary of a director, there shouldn't be any problem because the investment will be done from the director's loan anyway. So even if the company is in loss, the director can take salary.

zamaha wrote:Dear Zimba
Could you plz kindly explain the following issue as well.
When I writing the business plan I consulted with accountants and they told me this is right but now I am worried they think I amgoing to take £50k.

In my calculation, the revenue is enough every year to cover all expenses and salaries, so I mentioned In the plan that I will take £18k every year as salary to avoid further questioning from HO that how you will survive. But only in mid of first year I will buy equipments about £27k from my investment. In the profit and lost sheet, the company is in profit (even if I take salary) but in balance sheet it is clear buying stuff from investment. It is only one-off purchase and the rest of money will remain in the account. Is it a problem?!!

No

zimba88 wrote:

zamaha wrote:Dear Zimba
Could you plz kindly explain the following issue as well.
When I writing the business plan I consulted with accountants and they told me this is right but now I am worried they think I amgoing to take £50k.

In my calculation, the revenue is enough every year to cover all expenses and salaries, so I mentioned In the plan that I will take £18k every year as salary to avoid further questioning from HO that how you will survive. But only in mid of first year I will buy equipments about £27k from my investment. In the profit and lost sheet, the company is in profit (even if I take salary) but in balance sheet it is clear buying stuff from investment. It is only one-off purchase and the rest of money will remain in the account. Is it a problem?!!

No

Thanks. You are a real gem.

rajbhanu300 wrote:Hi,

Looking at the above discussion, I think I should also add my opinion. I think if the revenue generated(excluding director's loan) is equal or more than the salary of a director, there shouldn't be any problem because the investment will be done from the director's loan anyway. So even if the company is in loss, the director can take salary.

In this way, then sales minus director salaries only, i just need to add 400 for first year as director loan,

2nd year i had no revenue but were receivable next year 12,000 and director salary was 8500 (then i may need to add 8500 or may be not because revenue received next year)..

and in third year I had total revenue including previous year receivable 36000 and director salary 7800 so then nothing to add.

company remained in loss first 2 year about 4500 and 6200 respectively.

But i dont think so this approach is correct?